Will food become more expensive now?

Like last year, due to rising heat, the possibility of affecting the yield of many crops including wheat has increased again. In such a situation, along with affecting the quality, their prices are also expected to increase. According to a report by credit rating agency Crisil, grain prices may be 14 to 15% higher in 2023-24 than the average price of the last five years.

The reason for this is the vagaries of climate change, coupled with strong global demand and an increase in domestic demand. In such a situation, with the beginning of April of the business year 2022-23, the process of increasing the prices of food grains may continue further. Where the prices of wheat and pulses have increased by 8 to 11%.

On the other hand, the prices of maize, jowar, and bajra have increased by 27 to 30%. Crisil expects higher production of wheat in the current season. According to the Crisil report, if the monsoon is normal, then the production of major kharif crops like paddy, maize, bajra, and jowar is also expected to fall.

Crisil has said in its report, the National Oceanic and Atmospheric Administration has expressed the possibility of a 49% impact of El Nino on the southwest monsoon between June-July 2023 and 57% of El Nino between July and September. That is, if the monsoon is below normal this year, then all the estimates of better production may prove wrong and the prices of grains may also increase.

Before this El Nino happened in the year 2015. The southwest weather was then 14% below normal, reducing kharif grain production by 3%. On the other hand, this year, the maximum temperature during the first week of February in all the major wheat-producing areas is expected to be higher than the average of the last seven years, due to which production is expected to be affected.

Although the government claims that this year, due to early sowing and high-quality seeds that can tolerate heat, the possibility of damage to the crop is very less. A record production of 112.1 million tonnes of wheat is expected this year.

Last year, wheat production was only 107.7 million tonnes due to heatwaves in some states. In such a situation, the prices of food grains can be controlled only if the wheat crop is ineffective due to heat as well as bumper kharif production due to normal monsoon.

Get ready for this inflation:

People who have been troubled by inflation for the past almost one year, there is no hope of getting rid of this problem in the coming days also. This time the reason for the increase in inflation is the weakening rupee against the dollar and the increasing cost of companies. In such a situation, it is now going to put some of the burdens of this cost on the customers.

Due to its effect, the prices of food items, dairy products, alcohol, air conditioners, refrigerators, clothes imported from abroad and cosmetics, etc., can increase by up to 10%. In the next 1 to 2 months, these companies can increase their prices by 3 to 10%. Companies claim that this is the lowest increase in prices in the last two years.

Despite this increase, companies say that they are bearing most of the increased cost themselves to keep demand under control. According to the company, earlier the inflation of input used was limited to 4 to 5%, but now it has gone up to 6.5% overall. Milk and dairy products, which are already troubling people, will not be able to escape the brunt of inflation even further.

Milk prices have increased twice between October and November, whiled milk prices have increased by 8 to 9% so far, including the increase in early February. Due to this, products like butter, ghee, cheese, and ice cream have become costlier. The dairy industry says that the purchase of milk has become expensive due to the increase in the cost of fodder.

Therefore, the increase in milk prices may continue till October. According to the industry, the price of raw milk has increased for each product. That is, the impact of milk prices on the kitchen budget is likely to continue this year as well. Apart from the kitchen, talking about clothes, companies can increase the prices of premium imported apparel and personal care products by 8 to 10%.

Along with this, the cost of components used in AC, fridges, and microwaves has also increased. Due to this, their prices can also fall in the summer season. Companies say food inflation remains at a high level. There has also been a huge jump in the prices of wheat. No one had expected the level of inflation seen in the last two years.

What happened to India's growth?

On the economic front, the October-December quarter brought bad news for policymakers as well as everyone else. The performance of India's economy, which has been termed a bright spot by the IMF, has been disappointing in the third quarter amidst the shadow of a deepening recession in the world.

According to NSO data, the country's GDP growth rate has come down to 4.4% in the third quarter of 2022-23. India's economy grew at a rate of 11.2% in the third quarter of 2021-22. Earlier, the economic growth rate in the July-September quarter was 6.3%. The reason for this shortfall is believed to be the poor performance of the manufacturing sector.

Along with this, NSO in its second advance estimate has projected the economic growth rate to be 7% in 2022-23 and has increased the growth rate for 2021-22 from 8.7% to 9.1%. Experts believe that this break in the Indian economy will prove to be temporary and the country's growth rate will perform strongly in the coming days.

On the other hand, if we look at the performance of different sectors in the last quarter, a decline of 1.1% has been recorded in the production of the manufacturing sector. The growth rate of the mining and allied sector has come down to 3.7% in the December quarter. The growth rate of the construction sector has increased to 8.5%.

The growth rate of electricity, gas, water supply, and other essential services has been 8.2%. The services sector, trade, hotels, transport, communication, and services related to broadcasting have registered a growth of 9.7%. The growth of financial, real estate, and professional services has increased to 5.8%.

The growth rate of public administration, defense, and other services has come down to 2%. That is, good growth is being seen in some sectors and some are still under pressure. Along with this, the figures of per capita income of the last two years have also been released in NSO, according to which the per capita income of 2021-22 is estimated at ₹ 1,27,065 and the per capita income of ₹ 1, 48,524 in 2022-23.

Obviously, both these were Corona-affected years, so there was not much enthusiasm regarding income. But now the country can overcome this crisis and be successful in achieving higher per capita income this year.

Will food become more expensive now? | Get ready for this inflation.