Onion, wheat, pulses prices likely to remain high in Q4

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Price pressure to ease only after arrival of rabi crop, says NCAER

The wholesale price-based inflation may have cooled off for the fourth consecutive month in January to 6.62 per cent, but consumers are likely to continue to feel the pinch of high prices of pulses, wheat, onion, gram and tur even in the last quarter of the current fiscal, says the third quarter report of the National Council of Applied Economic Research.

According to NCAER’s Quarterly Agricultural Outlook and Situation Analysis Report for the third quarter, the projections indicate persistence of higher price rise in the case of pulses as a group and onion.

“The trends and projections point to continued price pressures in the case of wheat, gram and tur in the next two-three months. However, arrival of rabi crop in the market may ease some of the price pressures,” the report added.

High retail inflation may act as a deterrent for the central bank, which is likely to announce another round of rate cuts towards March-end.

Wholesale prices of onion shot up by 111.52 per cent in January while prices of pulses went up by 16.89 per cent and wheat prices were higher by 21.4 per cent while the overall retail inflation in January stood at 10.79 per cent.

NCAER is of the opinion that increased output in late kharif and rabi season will increase the overall production of onion by 2.5 per cent over the previous year while in case of pulses there will not be any significant increase in 2012-13 rabi pulse production, projected at around 11.3 million tonne. This would result in total pulse production in 2012-13 to 17 million tonne, which will be marginally below last year’s production of 17.2 million tonne.

“Hike in food prices led by an increase in onion prices as well as that of fruit and vegetables is a cause of great concern and calls for urgent measures to address supply side bottlenecks. These could include delisting perishables from APMC Act and augmenting investment in agri-infrastructure which would improve the productivity of agriculture and lead to a further decline in inflation”, Chandrajit Banerjee, director general of CII said.

The central bank had last month lowered interest rates by 0.25 per cent saying that with inflation showing signs of remaining range bound, it was now critical to arrest the loss of growth momentum.

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