Government Data Highlights the Effect of Inflation on Vegetables and Food Items

India's wholesale inflation surged to a 16-month high in June, driven by a significant rise in food prices, particularly vegetables. According to data from the Union Ministry of Commerce & Industry, wholesale inflation reached 3.36%, the highest since February 2023. This marks the fourth consecutive month of rising inflation.

The price of food articles witnessed a sharp increase of 10.87% in June compared to 9.82% in May. Vegetables led the surge, with inflation jumping to a staggering 38.76%, up from 32.42% in May. Onion prices skyrocketed by a concerning 93.35%, while potatoes saw inflation of 66.37%. Even pulses, a staple protein source, experienced a price rise of 21.64%.

While these categories witnessed significant inflation, other food items also saw a major hike. Fruits experienced inflation of 10.14%, cereals rose by 9.27%, and milk prices moved up by 3.37%.

The positive inflation rate in June is attributed to a rise in various sectors beyond food. The cost of manufactured food products, crude petroleum & natural gas, and mineral oils also contributed to the overall increase. Manufactured products witnessed a surge of 1.43%, a 0.78% rise compared to May.

However, there were some mitigating factors. Inflation in the fuel and power sector remained subdued at 1.03%, marginally lower than the 1.35% recorded in May.

This rise in wholesale inflation coincides with an increase in retail inflation, which reached a four-month high of 5.1% in June. The alignment of these figures suggests broad-based inflationary pressures impacting the Indian economy.

The Indian government is concerned about this trend, as rising food prices can disproportionately affect low-income households and strain household budgets. It will be interesting to see how the government responds to manage inflation and ensure price stability for essential commodities.