Prices of pulses to be subdued in short term: CRISIL
The positive impact of the high base wears off, the rabi crop - which is expected to be bumper - would have entered the market, keeping a fresh tab on prices. Beyond that, however, inflation in pulses will depend on demand revival and on whether farmers continue to increase production, says CRISIL.
December 03, 2013 / 13:51 IST
CRISILResearch's report on Pulses inflation
- Inflation in pulses has fallen sharply to -4.8 per cent during April-October 2013, down steeply from 23.0 per cent in the same period a year ago.
- At a time when food inflation is high and rising, declining prices of pulses render huge benefit to Indian households where pulses form a dominant source of protein in the diet.
- Prices of the commodity are expected to look up somewhat in coming months as the base effect wears off. All the same, pulses inflation is likely to stay low over the next few months thanks to good monsoons, higher acreage, lower hikes in minimum support prices and moderate demand.
- Beyond that low inflation in pulses will depend on demand revival and whether farmers continue to increase production despite low returns on the crop due to declining prices.
Food inflation in India has been on a steady uptrend this fiscal, rising to 18.2 per cent in October. Surging prices of rice, fruits & vegetables and animal protein (eggs/meat/fish) have been the primary drivers of inflation. While overall food inflation has averaged 13.3 per cent during April-October, inflation in these three commodity categories alone is at 15.1 per cent. With a weight of 79 per cent in primary food, they have contributed 84 per cent to food inflation in the fiscal so far.But contrary to perception, not all food items have seen a spike in prices. Pulses, for one, have actually seen a decline. In sugar, too, prices have fallen 6.9 per cent in October compared with the previous peak of 18.4 per cent seen in September 2012. Edible oils prices are lower at 0.7 per cent in October compared with around 10 per cent inflation a year ago. As measured by the wholesale price index, pulses prices fell 4.8 per cent in the first seven months of this fiscal.Conclusion: While the factors (mentioned in the pdf) support the decline in pulses prices, the extent of fall is also in part due to the high base of last year. Pulses inflation in April-October this year stood at -4.8 per cent, while it was as high as 23.0 per cent in the same period of 2012. Yet it could continue to remain low for a few more quarters. By the time the positive impact of the high base wears off, the rabi crop - which is expected to be bumper - would have entered the market, keeping a fresh tab on prices. Beyond that, however, inflation in pulses will depend on demand revival and on whether farmers continue to increase production.Disclaimer: CRISIL Research, a division of CRISIL Limited (CRISIL), has taken due care and caution in preparing this Report based on the information obtained by CRISIL from sources which it considers reliable (Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. This Report is not a
recommendation to invest / disinvest in any company covered in the Report. CRISIL especially states that it has no financial liability whatsoever to the subscribers / users / transmitters / distributors of this Report. CRISIL Research operates independently of, and does not have access to information obtained by CRISIL’s Ratings Division / CRISIL Risk and Infrastructure Solutions Limited (CRIS), which may, in their regular operations, obtain information of a confidential nature. The views expressed in this Report are that of CRISIL Research and not of CRISIL’s Ratings Division / CRIS. No part of this Report may be published / reproduced in any form without CRISIL’s prior written approval.The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. 
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