Potato prices remain high, tomato and onion prices have eased from a month ago, while edible oil prices are rising again. After reaching a four-year peak in November, prices have continued to rise in December. As of December, potato prices have reached Rs 37.59 per kg, according to data from the Ministry of Consumer Affairs.
The rise in potato prices comes even as India's retail inflation moderated in November to 5.48%, compared to a 14-month high of 6.21% in October, amidst easing in some food prices.
The crop damage in West Bengal due to unseasonal heavy rainfall caused the rise in potato prices since March, according to Crisil Market Intelligence and Analytics' Director of Research Pushan Sharma.
The lower arrivals and reduced yields, which led to depleting cold storage stocks, resulted in a sharp year-on-year increase in potato prices from a low base last year, Sharma explained.
The food prices are expected to ease sequentially in the coming weeks, as vegetable prices typically decrease in December when the kharif crop enters the market and a high base from last year will help lower inflation, given that vegetable prices missed their seasonal decline last year, Crisil said in a report post the release of CPI inflation.
However, the pressure from rising edible oil prices will need to be monitored, Crisil noted.
Food and beverage inflation eased to 8.2% in November from 9.69% in October.
Going forward, food inflation is likely to soften in the fourth quarter with seasonal easing of vegetables prices and kharif harvest arrivals; and good soil moisture conditions along with comfortable reservoir levels auguring well for rabi production, the central bank said during a media event post its latest MPC decision, projecting inflation at 4.5% in the January-March 2025 quarter.
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