Commodity Analysis

Monsoon shortfall

Compiled by Rajalakshmi Nirmal | Updated on January 16, 2018 Published on September 18, 2016

The south-west monsoon (June-to-September) is likely to end below average this year, against the IMD’s prediction of above-normal rainfall as the La Nina weather pattern hasn’t played out. The cumulative rainfall from June 1 to September 15 is 5 per cent below average for India as a whole, with the East and North-east showing the highest deficit of 14 per cent.

CPI eases, but WPI moves up

Consumer price inflation eased to 5.05 per cent in August, a five-month low from 6.07 per cent in July. The food inflation moderating to 5.9 per cent, from 8.4 per cent a month earlier brought the CPI lower. Vegetable costs rose 1 per cent in August compared with 14 per cent in July; pulses rose 22 per cent versus 27.5 per cent. Sugar and spices inflation remained above 8 per cent for the fifth consecutive month, limiting the fall in food inflation. However, on the contrary, wholesale price index inflation inched up in August to 3.74 per cent (from 3.5 per cent in July) led by higher prices of manufactured products (2.42 per cent) and fuel (1.62 per cent). Food inflation, however, was lower at 8.23 per cent compared to 11.82 per cent in July.

A price check on essentials

If retail prices of essential commodities do not come down, the Centre may invoke the Essential Commodities Act and impose a limit on maximum retail price (MRP) of 22 essential commodities. Food Minister Ram Vilas Paswan said last week at a press conference that the Act may soon be invoked if packaged essential prices do not come under control. In a notification issued on September 7, the Food Ministry modified the legal metrology (packaged commodities) rules that enable governments to fix retail prices. According to the modification, if the retail sale price of any essential commodity is “fixed and notified by the competent authority under the Essential Commodities Act, the same shall apply”.

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