Retail inflation in pulses likely to be less volatile this year: Crisil

By Sandip Das

Despite patchy distribution of monsoon rains, the retail inflation in pulses is expected to be less volatile this year, according to a report by research agency Crisil. “This year, assuming that pulses inflation continues to display the cobweb phenomena albeit less pronounced, the next peak could be 6 to 7 months away,” the rating agency has stated. It also stated “while volatility in pulses inflation has reduced,the other good news is that pulses inflation has been settling at a lower level. The first bodes well for pulse growers as lower volatility ensures better earnings visibility,”.

The agency had stated that truant weather patterns last year caused damage to production, which could have some impact on prices.

This year, too, “with rains delayed and uneven, and impacting pulses sowing, pressure on prices could be felt. But, continued government intervention via price stabilisation schemes could ensure that the next peak remains less intense,” Crisil has said.

‘Pulses and products’ has a combined weightage of 2.38% in the CPI basket. Retail inflation based on CPI for pulses in May was 6.56% , which is higher than headline inflation (4.25%) and retail food inflation (2.91%).

June inflation figures will be released on Wednesday.

Crisil’s market intelligence and analytics has stated that India’s import dependence on pulses has reduced from 19% in FY 2014 to 9-10% in FY23, with domestic production steadily picking up.

“The role of imports therefore has been strategic with imports being resorted to only in the interim periods of prices spikes,” it stated.

The softening of inflation in the pulses, according to CRISIL, was largely attributed to government’s policy interventions in recent years to improve the supply position of pulses, which includes incentivising cultivation and strategic imports in junction with administrative steps to stabilise prices.

The government hiked minimum support price (MSP) of pulses to push up production at the same time it had entered into MoU with Myanmar, Mozambique and Malawi for long term imports commitment for tur and urad.

To curb hoarding and speculation amid rising prices, the government in May had imposed limits on the stocks of tur and urad dal.

This article has been republished from Financial Express