Rice could keep India’s inflation print bloated, more curbs likely, Retail News, ET Retail
“The government is reportedly aiming to procure close to 52mn tonnes of rice, around 1.6% higher than last year. On the whole, rice stocks should remain above buffer levels, but current export restrictions may not necessarily improve the demand-supply situation materially, implying that there remains an upside risk to rice prices. As such, we believe there is a risk that further curbs on rice exports could be imposed, particularly in categories still exempted,” the report stated.
Centre has imposed a 20% duty on exports of certain categories of rice along with a ban on exports of broken rice in order to cool domestic prices as it fights inflation and poor sowing due to uneven rainfall.
India is the biggest exporter of rice in the world and the curbs could more pressure on global prices in the wake of erratic weather conditions and Russia-Ukraine war.
Nomura report estimates that a 5% rise in prices of rice, which constitutes around 4.4% of the overall CPI basket, could mean a 0.2% increase in inflation.
The food ministry has assured that the country will have a surplus output despite the rice production falling 6-7 million tonnes.
The inflation surge peaked in April at 7.8% and has softened a bit since then. The latest print is expected to pick up pace on the back of base effect and rising food prices. RBI Governor Shaktikanta Das has recently said that the inflation could moderate in second half of the current fiscal and could fall within the tolerance band in the fourth quarter.
The price of rice has been in focus for the past few months after the Centre imposed a ban on wheat exports in the wake of domestic production taking a hit due to excessive heatwave.