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Costlier wheat hits staples; flour prices get 22% higher

Wheat prices have remained stubbornly high in India, declining only marginally despite several measures undertaken by the government to cool prices, with a cascading effect on rates of wheat products from atta (flour) to biscuits and confectionary.

Daily retail wheat flour prices on February 1 were 22% higher on an annualised basis, while wholesale prices leapt 31%, official data show.

Winter sowing of the staple grain in the world’s second-largest consumer has held steady. The country hopes to reap a record 111-112 million tonnes, with harvesting two months away.

In 2022, India was hoping to harvest 110 million tonne of wheat, but a prolonged heatwave around reaping time crimped output to 106.84 million tonne, about 2.5% lower than the preceding year’s 109.59 million tonne.

The central government last week decided to sell 3 million tonnes from its wheat stock in the open mark for bulk consumers like flour mills, even as state reserves have fallen to the lowest level in six years. This helped prices to slide by 6-7% before rising again. In May last year, India banned wheat exports amid limited supplies from the Black Sea region due to Russia’s invasion of Ukraine.

Higher wheat prices have stoked inflation of everyday products. Britannia Industries, which makes biscuits such as Good Day and Little Hearts, raised prices of its entire product range by nearly 22% in the past year, according to a Comtrade, a commodity analyst.

Rates of regular sliced bread and whole loaves have increased by an annualised 11% and 7%, respectively, data from the All India Bread Manufacturers’ Association showed.

Domestic wheat prices rose to a record high of 32,500 per tonne in January, way above the government-set minimum support price of 21,250.

Retail food inflation dipped to 4.2% in December, the latest available data, from a high of 8.6% in September. But cereal inflation at 13.8% year-on-year in December continued to be high.

The government’s decision to offload 3 million tonne in the open market is also aimed at lowering procurement prices. The government buys rice and wheat from farmers at these rates to run the world’s biggest food welfare programme that entitles about 800 million people to receive 5kg of rice and wheat every month, which has been made free by the government till December 2023.


    Zia Haq reports on public policy, economy and agriculture. Particularly interested in development economics and growth theories.
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