Indian grain stocks held by the federal government, which provide subsidized grain to 800 million people, fell to their lowest level in five years, as extreme weather conditions destroyed both winter-sown wheat crops and rice sown in the summer, pushing retail food prices to a 22-month high. .
However, the total stock of the two commodities, at 51.14 million tonnes as of October 1, was almost 66% higher than the mandatory buffer standard and the strategic reserve stock of 30.77 million tonnes that the government is bound to maintain for this time of year, according to data from the Food Corporation of India (FCI) showed Thursday.
Rice stocks are sufficient to meet domestic needs, but wheat stocks have fallen to their lowest level in 14 years, mainly because the government has only been able to procure about half of its target, farmers increasingly selling to private traders due to strong export demand due to the war in Ukraine.
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A prolonged heat wave in March reduced wheat production, prompting the government to ban exports in May as supplies dwindled. The government also implemented restrictions on overseas rice shipments last month, imposing a 20 percent export duty and banning shipments of broken rice to bolster domestic availability.
Low state-owned grain reserves will tighten government food management operations to meet food distribution needs and keep prices high.
India’s consumer inflation rate hit a five-month high of 7.41% in September on an annual basis, from a 7% rise the previous month, beating the Reserve Bank’s target of 4-6% of India (RBI) for the ninth month in a row, data showed on Wednesday.
The jump in retail prices was driven by a general increase in food prices in September, just like the previous month, with cereals, pulses, vegetables, milk and dairy products maintaining an upward trend.
Food inflation jumped to a 22-month high of 8.4% in September, complicating government responses so far to bring prices down.
“The seasonal impact of rains on vegetable prices will now become noticeable. In the future, unseasonal rains in different parts of the country up to 700% in grain producing states could have a significant impact on grain and vegetable prices,” said Soumya Kanti Ghosh, Chief Economic Advisor of the State Bank of India group, in a press release. note Thursday.
A rise in food prices hurts poor households more because they tend to spend a larger proportion of their monthly budget on staples, milk, vegetables and protein. They also increase pressure on the Reserve Bank to raise benchmark lending rates to curb inflation, which tends to hurt growth.
Wheat stocks stood at 22.7 million tonnes as of October 1, just above the minimum three-month operating stock threshold required and the strategic reserve of 20.5 million tonnes for this period of the year. year.
Stocks of rice as of October 1 stood at 20.47 million tonnes and those of unmilled paddy at 11.83 million tonnes, compared to 25.33 million tonnes and 14.07 million tonnes respectively the previous year. .