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Continued Soaring Costs of Milk and Rice Persist Despite Declining CPI Inflation Rates

Unabated Milk and Rice Price Hikes Persist Despite Falling CPI Inflation

Persistent High Milk and Rice Prices Amid Decreasing CPI Inflation for the Fourth Consecutive Month

Despite a consistent decline in consumer price index (CPI) inflation for the past four months, the prices of milk and rice have remained stubbornly high, according to data from the Centre For Monitoring Indian Economy (CMIE). While the CPI inflation dropped to 4.25 percent in May from 7.04 percent in the same period last year, the inflation rates for milk and rice have continued to surge, defying the downward trend.

In May, rice inflation stood at 11.33 percent, showing a marginal decrease from April’s rate of 11.37 percent. Notably, rice inflation has maintained a double-digit figure since October 2022. Similarly, the inflation for milk and milk products rose from 8.85 percent in April to 8.91 percent in June, with predictions of crossing the 9 percent mark in the current month, as per CMIE’s analysis.

It is worth highlighting that the food group constitutes 40 percent of the CPI, and while inflation eased for cereals and wheat in May, rice and milk prices continued to surge. Wheat inflation dropped from 15.39 percent in April to 12.61 percent in May, and cereal and products inflation also saw a slight decline from 13.67 percent in April to 12.65 percent in May.

Overall, the food group’s inflation declined to 2.91 percent in May, down from the 3.84 percent recorded in April. CMIE’s analysis indicates the likelihood of a further fall in June’s data as well.

In summary, despite the downward trajectory of CPI inflation, the persistently high prices of milk and rice, along with a relatively stable rice inflation rate and minor fluctuations in other food categories, continue to pose challenges for consumers and the overall economic landscape.

The sustained high prices of milk and rice, despite the overall decline in CPI inflation, can be attributed to various factors such as supply chain disruptions, increased input costs, and market dynamics. Supply chain disruptions, including transportation constraints and logistical challenges, have hampered the smooth flow of these essential commodities, leading to reduced availability and higher prices. Additionally, rising input costs, such as feed for dairy animals and fertilizers for rice cultivation, have contributed to the upward pressure on prices. These factors, coupled with market dynamics influenced by demand-supply imbalances and market speculation, have kept milk and rice prices elevated, posing concerns for consumers and policymakers alike. Efforts to address these underlying factors and restore stability to the prices of these essential food items remain crucial for ensuring food security and affordability for the population.

Furthermore, the persistent high prices of milk and rice could also be attributed to weather-related factors and production challenges. Adverse weather conditions, such as droughts, floods, and unseasonal rainfall, can significantly impact agricultural productivity and disrupt the cultivation of crops like rice. Reduced yields and quality of rice crops lead to lower supply in the market, causing prices to remain high. Similarly, milk production can be affected by factors like extreme temperatures, diseases among livestock, and fluctuations in fodder availability, all of which can contribute to limited milk supply and consequently higher prices.

Additionally, changing consumption patterns and evolving dietary preferences may have an impact on the demand for milk and rice. As incomes rise and lifestyles change, there might be an increased demand for these staple food items, exerting upward pressure on prices. Moreover, population growth and urbanization further intensify the demand for milk and rice, exacerbating the supply-demand imbalance and contributing to sustained high prices.

Government policies and interventions play a crucial role in addressing the challenges associated with the high prices of milk and rice. Efforts to improve agricultural productivity, such as providing farmers with access to better technologies, quality seeds, and irrigation facilities, can help boost production and alleviate supply constraints. Enhancing storage and distribution infrastructure, along with efficient supply chain management, can ensure smoother movement of these commodities from farm to market, reducing post-harvest losses and improving price stability.

Moreover, the government can consider measures like price stabilization mechanisms, direct support to farmers, and targeted subsidies to mitigate the burden on consumers and ensure affordability of these essential food items. Collaborative efforts between policymakers, farmers, industry stakeholders, and consumer groups are vital for developing comprehensive strategies that address the multifaceted issues contributing to the high prices of milk and rice.

In conclusion, while overall CPI inflation has been decreasing, the persistent high prices of milk and rice present challenges for consumers, the agricultural sector, and policymakers. Supply chain disruptions, rising input costs, weather-related factors, changing consumption patterns, and demand-supply dynamics all contribute to the sustained high prices. Addressing these challenges requires a comprehensive approach involving measures to enhance productivity, improve infrastructure, and implement supportive policies to ensure stability in the prices of milk and rice, promoting food security and affordability for the population.

Also read this article: Do you need to submit a tax return if your income is below the exemption threshold?

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