Prices of cereals are unlikely to surge as they did recently but may remain elevated well into next financial year, according to Crisil Ratings.
Climate change, strong global and rise in domestic demand contributed to the rise in wheat, a staple cereal, the rating agency said.
Retail inflation in India again breached RBI's upper tolerance band in the month of January 2023, with the Consumer Price Index pegged at 6.52 per cent.
Among groups, cereals and products - which include wheat and its derivatives, eggs, spices, among others, contributed to the elevation in the retail inflation in January.
In the current financial year, prices of cereals have risen significantly year-on-year in the first nine months -- of wheat and paddy by 8-11 per cent, and of maize, jowar and bajra by 27-31 per cent, the Crisil said.
"The reasons are for all to see. Recent years have seen a spurt in climate-change events, like heat waves and erratic monsoon which has resulted in lower production of wheat and paddy, respectively, this fiscal," said Pushan Sharma, Director, Research, CRISIL Market Intelligence and Analytics.
"Add to this demand from global and domestic markets and the stocks of wheat and rice are estimated to be lower by 12 per cent and 35 per cent, respectively, for fiscal 2023, leading to a surge in prices of these commodities," Sharma added.
On January 25, the government said FCI would offload 30 lakh tonnes of wheat from the central pool in the markets under the Open Market Sale Scheme, within the next two months, for containing the rising domestic prices of the staple foodgrain.
The commencement of the e-auction of wheat in the open market to cool the staple food grain's prices has already left an impact as the government said the prices retreated over 10 per cent in the past week.
Wheat, a rabi crop and in an advanced maturing stage, is expected to hit mandis in the next few weeks.
( With inputs from ANI )
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