International food prices have eased for the seventh straight month in October. This comes even as the Reserve Bank of India (RBI) is set to submit a report. To the Centre on its “failure” to keep annual retail inflation below 6 percent. For three consecutive quarters and the remedial actions proposed to take. To achieve the target.
The UN Food and Agricultural Organisation’s Food Price Index averaged 135.9 points in October. Which is lower compared to the previous month’s 136 points.
This marks the seventh successive month of decline in the index. Which is a weighted average of world prices of a basket of food commodities. Over a base period value, taken at 100 for 2014-16.
The FPI scaled an all-time high of 159.7 points in March, the month that followed Russia’s invasion of Ukraine.
Explain
The latest index value of 135.9 is the lowest since the 135.6 level in January, which was before the war. On a cumulative basis, the benchmark gauge has fallen by 14.9 percent between March and October.
The dip in the FPI in October has been despite the cereals sub-index posting an increase from 147.9 to 152.3 points. Global wheat and maize prices rose month-on-month. On the back of uncertainties relating to exports from Ukraine.
Russia had suspended its participation. In the UN and Turkey-brokered Black Sea Grain Initiative. That allows the safe passage of Ukrainian agri-commodities through designated ports.
All other major sub-indices constituting the FPI registered drops in October over September. The vegetable oils sub-index fell from 152.6 to 150.1 points. So did that of sugar (109.7 to 109 points), dairy (142.6 to 140.1), and meat (120.1 to 118.4).
The vegetable oils and sugar sub-indices for October were, in fact, 18.8 percent and 8.5 percent down. Which are from their respective year-ago levels.
Global food prices coming off from their highs reduces the risks of imported inflation. Which was particularly in edible oils. The Modi government and RBI would also be hoping for an easing of domestic price pressures. These have remained elevated on account of extended southwest monsoon rains. Which damages the harvest-ready Kharif crops in many parts of the country.
The same excess rains helped fill dam reservoirs and recharge groundwater aquifers. that should favor the rabi (winter-spring) crops now being planted.
