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New Delhi: For two months of the year, CPI and WPI touched historic low values. It seems like RBI is well on its way of achieving its inflationary target of 5.8% January 2016.
Low inflationary figures can be attributed to three major factors — decline in global crude oil prices, sluggish domestic demand, and softening food inflation, the Crisil report said.
Food inflation has been easing in the last year 4.1% average; it makes up 39.1% of the total inflation measure. While all the components of food inflation fell in the last one year, the inflation caused by pulse prices has touched its highest level in a decade.
Pulses which holds 6.1% weightage, grew 24.6% in last one year, according to the Crisil report.
The price of pulses has been making headlines for the last few week. Pulses make up the second most important part of an average Indian’s diet after cereals; an average Indian spends nearly 5% of its expenditure on pulses.
In the last decade — 2004-05 to 2014-15 — while the overall WPI inflation rate fell to 6.3%, pulses inflation was much higher at 9.4% average.
According to traders, merchants and grocers, the sky-rocketing prices can be attributed to the deficient monsoon this year, which has lead to a crop failure in the country.
The lack of rains this year has affected the pulses yield in several crop producing states, leading to a huge shortage of about 10 million tonnes.
As per the data, the price of pulses has witnessed a spike every three years.
According to a study by industry body Assocham, India has a total annual demand of 27.1 million metric tonne of pulses, out of which nearly 17 million metric tonne is grown in the country and the rest is imported.
With poor monsoon, production was bound to be lesser than usual. Imports are also likely to be more expensive these days, weighing on the import bill, as pulses producing countries are also in the midst of a supply shortage prompting them to hike rates, the study says.
In 2013-14, India imported pulses worth $1.9 billion. Our dependence on imports for pulses, higher prices and declining per capital availability, and consumption of pulses have been matter of concern.
Till last month, the prices of toor dal, in some retail markets were dearer, and even touching a historic high of Rs 210 per kg, from the earlier Rs 120-140 per kg in September-end, in most parts of the country.
The major price rise can be seen if you compare data with the year ago period. Last year, toor dal was selling at only Rs 85 per kg. Similarly, urad dal prices serve up at nearly Rs 190 per kg from Rs 100 per kg in the year-ago period.
The Wholesale Price Index-based inflation was (-)4.54% in September. In October last year, it was 1.66%.