According to a latest data, potato prices rose 78.7%, up from 78.1% in September, while onion inflation halved from 78.8% to 39.25% in October. File photo
| Photo Credit: The Hindu

Inflation in India’s wholesale prices hardened from 1.84% in September to 2.4% in October, led by a well over two-year high spike in food prices to 11.6% from 9.5% in the previous month, as  per the data released on Thursday (November 14, 2024).

Also read:India’s middle class tightens its belt, squeezed by food inflation

Vegetable prices soared over 63%, compared with the 14-month peak inflation of about 49% recorded in September. Potato prices rose 78.7%, up from 78.1% in September, while onion inflation halved from 78.8% to 39.25% in October.

The Wholesale Food Index jumped 3% on a month-on-month basis. The Commerce and Industry Ministry attributed the rise in wholesale price inflation to an increase in prices of food articles, manufacture of food products, other manufacturing, manufacture of machinery & equipment, manufacture of motor vehicles, trailers & semi-trailers.

Inflation in manufactured products also picked up to 1.5% in October from 1% in the previous two months, while primary articles inflation more than tripled from August to touch 8.1%.

The cost of a home-cooked vegetarian thali in Mumbai has increased by 65% in the last five years. At the same time, the average wage earned by a casual labourer working in urban Maharashtra has increased by only 37% and that of a salaried worker has increased by 28%.

This disparity between wages/salaries and expenditure has led to essential food items becoming increasingly unaffordable. Given the fixed food budget in most Indian homes, the imbalance results in smaller thalis or fewer items in the thali leading to increasingly unbalanced or unfulfilling meals.

It has been assumed that an average Indian family will be able to meet their daily dietary needs if they consume food equivalent to two thalis per day, spread across breakfast, lunch and dinner. Non-vegetarian meals were not considered due to lack of past data. To avail commodity prices Mumbai was chosen as an exemplar due to the availability of consistent data. The wages and salaries in urban Maharashtra were considered as Mumbai-specific rates were not available.

To decode how much two thalis cost, on average, in Mumbai, the ingredients used were identified — white rice, toor dal, onion, garlic, green chilli, ginger, tomato, potato, peas, atta, cabbage, sunflower oil, salt, and rice — and the grams required for two servings were measured. The average retail cost for buying those ingredients in Mumbai — as on August 8 this year, a year ago (2022), three years ago (2020) and five years ago (2018) — were collated from the Consumer Affairs Ministry and the National Horticulture Board.

Table 1 | The table lists the weight of commodities required to prepared two thalis and its retail prices in ₹.

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For instance, the cost of buying 125 grams of toor dal, which is required to make two thalis, increased from ₹13.1 to ₹21.1 in the past five years (Table 1). Similarly the cost of buying 100 grams of tomato increased from ₹5.7 to ₹17. In contrast, the price of 300 grams of potato decreased from ₹12 to ₹8.

Table 2 | The table shows the cost of thali in ₹.

The cost of all the ingredients for two thalis totalled ₹112.6 this year, ₹82 last year, ₹81.4 in 2020, and ₹67.9 in 2018 (Table 2). In essence, the cost of making two thalis in a Mumbai household every day of a month increased from ₹2,037 in 2018 to ₹3,378 in 2023.

Table 3 | The table shows the average daily wage of a casual labourer (other than in public works) and the average salary of a regular salaried employee in urban Maharashtra.

Only the wages/salaries of men in Maharashtra were considered, as the latest labour force participation rate in Mumbai for men was 70.5% while it was 18.8% for women. The daily average wage of men in urban Maharashtra increased from ₹301 a day in 2018 to ₹414 a day in 2023. This was then extrapolated for 30 days to arrive at monthly earnings. The average salary of men in urban Maharashtra increased from ₹20,520 to ₹26,335 in the same period.

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As can be seen from Tables 2 and 3, while the cost of making a thali increased by 65% in the past five years, daily wages increased only by 37% and salaries only by 28%.

Table 4 | The table shows the cost of making two thalis every day for a month as a share of monthly wages/salaries.

The cost of making two thalis every day for a month, when considered as a share of wages/salaries, increased from 22.5% of a casual labourer’s monthly earnings in 2018 to 27.2% in 2023. In the case of those who drew a regular salary, it increased from 9.9% to 12.8% in the same period, as shown in Table 4.

Although thali preparation requires more ingredients, such as spices and ghee, data was only available for the ingredients listed in Table 1. So, in reality, the cost of making a thali would be an even higher share of salaries/wages than what we ascertained in this exercise.

vignesh.r@thehindu.co.in and sonikka.l@thehindu.co.in

Source: Department for Consumer Affairs, National Horticulture Board, Periodic Labour Force Survey, Report on District Level Estimates for the State of Maharashtra

Also read | Retail inflation surges to 7.44% in July

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The retail inflation touched a 15-month high of 7.44% in July, a spike from 4.87% in June. File
| Photo Credit: PTI

The government expects vegetable prices to start cooling off from next month with the advent of new crops in the market, but rising crude oil prices is a concern even though it is still within the tolerable zone of $90 a barrel, a Finance Ministry official said.

The official further said that reduction in excise duty is not on cards and the government is driving infrastructure investment, and private sector capital investment is yet to gather steam.

Also Read | To curb price rise, Centre releases more grain stock under open market sale

He further said that the Centre’s capital expenditure which was 28% of Budget estimates at the end of June quarter, will reach 50% by September end. In the 2023-24 budget, the government had hiked capital investment outlay by 33% to ₹10 lakh crore in the current fiscal.

The official further said that a 6% rainfall deficit is unlikely to impact kharif sowing as the agriculture sector is resilient. The government has been taking steps to control inflation, including releasing wheat and rice stocks from reserves, putting restrictions on exports of rice, sugar, and allowing import of pulses and oilseeds.

“Flexible trade policy has been adopted to keep prices down. We must remember that global food prices are very high due to the Ukraine war and the supply of food grains has been affected and that is a global factor from which Indian cannot remain isolated. We have taken measures to isolate our population from that inflation and relative to others we are in a much better position,” the official told PTI.

He said interventions have been made to cool tomato prices and those steps will bear fruit in the coming months. Tomato is a seasonal crop and we will get another crop shortly and the price pressure will ease.

“This temporarily high inflation is partly driven by vegetables. I expect the vegetable prices will contract quickly, likely by next month,” the official added.

The retail inflation touched a 15-month high of 7.44% in July, a spike from 4.87% in June. However, wholesale price based inflation continued in the negative zone for the fourth straight month at (-)1.36% in July.

In July, the annual retail inflation in the vegetables basket was at 37.44%, spices at 21.63%, pulses and products at 13.27%, and cereals and products at 13%.

To a question on whether the government is concerned about the recent surge in crude oil prices, the official said that budget calculations do not include crude oil prices because the government does not give subsidies to oil marketing companies. So the fluctuation in crude prices does not have any impact on fiscal math.

Crude oil prices currently are hovering around $85 per barrel as against $70-73 a barrel at the time of budget.

“Rising crude oil price is a concern but they are still within a tolerable zone from the point of view of oil marketing companies. It doesn’t necessitate any policy adjustment right now. The budget calculations are on track. I think we are quite ok with oil at about $80-85, up to $90 we shouldn’t be worried. Beyond $90 it has an impact on inflation and other things,” the official said.

The official also ruled out any cut in excise duty on petrol and diesel, saying it is not under consideration as of now. “We are not expecting any excise duty cut in petrol, diesel,” he added.