Inflation could rise during festivals; wheat prices reach eight month high in Sep

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Due to major festivals like Dussehra and Diwali, the demand for wheat has increased. Additionally, limited supply and import duties have made foreign purchases impractical for domestic wheat mills. So, the prices of Indian wheat have increased. Wheat prices reached the highest level in eight months on Tuesday. Rising wheat prices can contribute to retail inflation.

According to reports, in New Delhi, the price of wheat increased by 1.6% on Tuesday, reaching ₹27,390 per ton, the highest since February 10. Wheat prices have increased by about 22% in the last six months. According to Pramod Kumar, the president of the Roller Flour Millers Federation, the demand during the festive season is causing the prices of wheat to rise. To reduce prices, the government should allow duty-free imports. However, the Ministry of Food stated last month that there is no plan to abolish the 40% import duty on Indian  wheat.

Looking at the figures, as of October 1, the wheat stock in government warehouses was 24 million tons, which is significantly less compared to the average of 37.7 million tons over the past five years. Ashwini Bansod, Chief of Commodity Research at Phillip Capital India Private Limited, says that  prices of domestic wheat are rising due to a lack of imports and the government purchase has been lesser than the target. In contrast to the target of 34.15 million tons for 2023, the central government has purchased 26.2 million tons of wheat from farmers.

Bansod also expressed concerns about the market following the El Niño pattern, which could result in higher temperatures during the winter, potentially negatively affecting the upcoming wheat crop in the market. The government has estimated that wheat production will increase to a record 112.74 million metric tons in 2023.