Food prices likely to remain balanced from current levels: KV Thomas

The food inflation, which entered the double-digits zone again, for the week ended October 15, the Minister of State (independent charge) for Consumer Affairs, Food and Public Distribution KV Thomas, said that the hovering food prices may not come down substantially from current level but the prices may not increase from the current level. Food minister’s comment had come after the Reserve Bank of India’s (RBI) 13th hike in its key policy rates to control inflation. India’s weekly food inflation measured by the Wholesale Price Index (WPI) is at 6-month high, sustaining the pressure on overall inflation and policy makers.

'My experience over the past one year is that inflation in 15 essential food items, except for a few pulses and edible oils, has remained steady. Other than these, prices of paddy, wheat and sugar and other items have been stable. This is one of the reasons for my optimism that food prices will stabilize over the next few months,' said Thomas.

The inflation has spread from food items to the manufactured products, which accounts for more than 65% of total the WPI. The RBI, which increased its key policy rates by 25 basis points, expects inflation to decline by December and chances of another rate hike is relatively low. 

The Minimum Support Prices (MPS) and increase in prices of petroleum products, which increased the cost of transportation, are responsible for the current high food inflation.  The Cabinet Committee on Economic Affairs increased the prices of wheat by Rs 164 a quintal to Rs 1,285. The prices of Chana and Masur were also increased by Rs 700 and Rs 550 each per quintal to Rs 2,800 each.

K V Thomas said, 'on the one hand, we say farmers must benefit and so give them cheap water supply, cheap electricity, higher MSP.....In Kerala, for example, we say farmers must be given higher prices for coconut, copra and natural rubber-....then we grumble about high coconut oil and tyre prices. How can these be controlled..

Experts are of the view that the large scale purchases of food grains by the government for subsidized supply to low income families reduces their availability in the local market and it becomes costlier for the middle class. On the other hand, in spite non-procurement of pulses a constant rising of benchmark prices makes them dearer. The government purchases around 30% of total food grain production every year for the distribution via ration shops.