Spot prices of essentials rise

Even as the inflation rate indicated by the Wholesale Price Index (WPI) is moving southward, the spot market prices of essential agro-commodities have started moving up in the last one month. While spot prices have gone up 5 to 10 per cent, the government's wholesales price indices of these commodities remained marginally up last month.

The prices of pulses, cereals and edible oils and oilseeds are up 5-11 per cent while potato, sugar and coffee prices are up around 3-5 per cent. The WPI of food grains was marginally down from 210.5 on May 26 to 210.4 on June 30, with the cereals index remaining unchanged at 215.2 and the pulses index down from 248.9 to 248.4.

For the comparison, the spot prices and the WPI of agro-commodities as on May 26 and June 30 (the latest WPI available) have been considered. The spot prices are closing prices on these two days, provided by the Multi Commodity Exchange (MCX) and the National Commodity and Derivative Exchange of India (NCDEX).

A Business Standard Research Bureau study shows that the spot prices of agro-commodities such as maize, wheat, peas, lentil (masur), groundnut oil and oilseeds, potato, black pepper, sugar and sesame seed have risen at a higher pace than that of the WPI index of these commodities.

For example, the WPI for wheat declined by 0.32 per cent between May 26 and June 30, while the spot prices shot up by 6-9.6 per cent in Delhi and other markets to Rs 1,070 per quintal. The prices are likely to move up further from the current level to over Rs 1,500 a quintal in the future.

The WPI of lentil moved up by 6.8 per cent while the spot prices were up over nine per cent. The WPI of maize had declined by over three per cent compared with the nine per cent increase in spot prices. Similarly, the WPI of groundnut went down by 5.9 per cent, while the prices of groundnut were up by over 10 per cent.

The rise in inflation over the last four quarters was over four per cent. However, higher agro-prices in both the global as well as domestic markets are likely to push up inflation. For example, in the first two weeks of the current month, the prices of pulses, cereals, edible oils and oilseeds have hardened further.

Wheat, after softening to below Rs 800 per quintal in February, has moved up above Rs 1,100 now.