Food inflation proxy dips to three-month low in Sept

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The average cost of a thali — ratings agency Crisil’s proxy of retail food inflation gauge – dipped to a three-month low in September, providing an indication that the kitchen budget might have got some sort of relief from the July shock, thanks to a decline in overall vegetable and especially tomato prices. The Centre also reduced the price of the 14.2 kg domestic LPG cylinder by Rs 200, cooling the price front a bit.

The average cost of a vegetarian thali dropped 17.5% month-on-month to Rs 27.9 in September. The price of a non-veg thali came down by 9% to reach Rs 61.4.

It also indicates that the retail inflation level might climb down a bit in September continuing the trend in August, down from the 7.44% level in July.

“The major contribution was from tomato prices, which declined 62% month-on-month to Rs 39/kg in September 2023 from Rs 102/kg in August,” said a Crisil report on October 5.

Incidentally, the cost of fuel constitutes 14% of the cost of a vegetarian thali and 8% of that of a non-vegetarian thali. The drop in domestic LPG cylinders also contributed to the decline in prices.

The price of a 14.2 kg LPG cylinder came down from Rs 1,103 in August to Rs 903 in September.

The cost of a non-vegetarian thali in the different months of this financial year was the following – Rs 58.7 (April), Rs 59.7 (May), Rs 60.4 (June), Rs 67.6 (July), Rs 67.3 (August) and Rs 61.4 (September).

Therefore, the cost of both the veg and non-veg thalis are higher than the price levels in the first month of the financial year.

On the other hand, the cost of a vegetarian thali in the different months was the following – Rs 25.4 (April), Rs 27.6 (May), Rs 27.8 (June), Rs 34 (July), Rs 33.8 (August) and Rs 27.9 (September).

The Crisil report observed “Prices of chillies also provided some relief by cooling off 31% on the month.”

“Onion prices rose 12% on month in September and are expected to remain firm amid the expected lower output in kharif 2023,” the rating agency said.

A 2-3% rise in chicken (broiler) prices prevented non-veg thali prices from declining at rates similar to the veg thali. Chicken prices constitute about 50% of the cost of non-veg thali.

Incidentally, food items have nearly 47% weightage in the overall inflation basket.

Earlier in the week, the World Bank raised the country’s inflation forecast in the current financial year from 5.2% to 5.9%.

(ENDS)