Food prices drag retail inflation

Amid farmers unrest in some parts of the country, retail food inflation entered deflationary zone in May seeing a negative growth of 1.05 per cent. This pulled the overall retail inflation in the country to 2.18 per cent in May, which is lowest level in at least five years.

This comes when farmers in many part of the country are protesting that they are being forced to sell their produce at low prices at a time of bumper crop.

With prospects of good monsoon this year, there is expectation of good crop production, which could further push down food grain prices. This is because India is already sitting on huge inventory of food grains from last year's record harvest. Though government is buying food products at minimum support prices, it is restricted to some big mandis

As per the data, retail vegetables prices saw a negative growth of 13 per cent. Pulses, which was sown abundantly by farmers as their prices had spiked in previous years, witnessed a 19.45 percent negative growth in inflation in May. Fruits prices rose by 1.40 per cent in May.

The foods and beverages category showed a growth of minus 0.22 per cent for May.

"While decline is food inflation is good news for policy makers and consumers, it is not very good news for farmers and especially vegetable and pulses farmers. Prices of pulses in some harvesting areas are already lower than the MSP and thus farmers are not getting full benefit of increased production leading to farmer unrest and increasing clamour for farm loan waiver," Sunil Kumar Sinha, Principal Economist, India Ratings & Research told a news agency.