India's Wheat Price Hits A Six-Month High On Limited Supply

India's wheat prices surged to their highest level since February due to limited supply.

Atta is retailing at Rs 37.4 per kg in August across India on average, according to data from the department of consumer affairs.

Wheat and rice prices have been rising over the past two months due to tight supply and lower stocks compared with historical trends, though they remain higher than buffer norms, according to Barclays. Government intervention through offloading stocks via e-auctions has garnered a tepid response, which possibly prompted the recourse to trade measures as a precautionary move, it said.

In the current tranche of e-auctions, the reduction in retail price is being targeted by offering up to 100 tonne for buyers of wheat and 1,000 tonne for rice, the Ministry of Consumer Affairs, Food, and Public Distribution said in a press release.

While the government banned exports of non-basmati white rice on July 20, it said it may consider importing more wheat.

Currently, the Food Corporation of India is stocking 301.5 lakh metric tonne of wheat and 253.5 lakh metric tonne of rice.

Inflation in wheat and atta remains elevated at 12.4% on an annual basis, despite having eased since the beginning of the year and remaining at its lowest in nearly a year. However, high-frequency data from the Department of Consumer Affairs indicates an uptick in wheat inflation in July.

Retail inflation is expected to breach the Reserve Bank of India's upper target range of 6% in July, led by an increase in prices across food items.