Garlic hits Rs 400/kg: A pungent punch to November's inflation numbers

The surge in vegetable prices has been a key factor in driving inflation figures. In the previous quarter, tomatoes, onions, and chillies were the primary contributors, while currently, garlic has taken centre stage. In Maharashtra, the cost of garlic has surged to Rs 400 per kilogram.

November saw food inflation as the main driver of overall inflation, aligning with economists' predictions. Month-on-month data reveals a substantial increase in vegetable prices, followed by eggs and cereals. Food inflation rose from 6.6 per cent to 8.7 per cent in November, with cereal inflation at 10.27 per cent, vegetable inflation at 17.70 per cent, and pulses inflation at 20.23 per cent.

Supply shortage spurs price surge

Navi Mumbai has witnessed a sharp increase in garlic prices, leading to the exclusion of garlic-based dishes from menus. Unfavourable weather conditions in Nashik and Pune have adversely affected garlic crops, causing a supply shortage. Wholesalers in Mumbai are now sourcing garlic from Gujarat, Madhya Pradesh, and Rajasthan, incurring higher logistics costs. Retail garlic prices have doubled, creating a financial burden for consumers, with no immediate improvement expected.

The cost of garlic has nearly doubled in recent weeks due to limited supply. Consumers are now grappling with a revised price range, with the essential bulb selling at 150-250 per kg in APMC wholesale yards, up from the previous range of 100-150 per kg just last month.

This shift has elevated retail prices to the range of 300 to 400 per kg. Currently, the wholesale market is receiving 15-20 trucks daily, a decline from the typical 25 to 30 vehicles. The reduced influx from southern states has exacerbated the supply shortage, contributing to the price surge.

Traders note a drop in supplies from Ooty and Malapuram, attributing it to the supply crunch that is pushing prices higher. Compared to the previous month, the current prices represent a seasonal high, causing disruptions in monthly household budgets.

Traders anticipate that the arrival of the new crop will take time, keeping prices elevated in the interim. Unfavourable weather conditions in October and November have led to crop damage in various regions. The blame game between wholesalers and retailers intensifies, each accusing the other for price disparity within the market chain.

RBI's inflation emphasis

The outlook for food inflation remains grim, with the RBI emphasising its focus on controlling inflation. Governor Shaktikanta Das stated that recent inflation data should not breed complacency, emphasising the ongoing battle against inflation. Central banks worldwide echo this sentiment, underscoring the need for vigilance in managing food inflation.

Retail inflation accelerated to 5.55 per cent in November, up from 4.87 per cent in October but below economists' 5.8 per cent estimate. Despite being the highest in three months, November's 5.5 per cent overall inflation is lower than last year's 5.88 per cent. Rural inflation at 5.85 per cent surpassed urban inflation at 5.26 per cent, both rising since October. While headline inflation aligns with the RBI's 2-6 per cent range, it has exceeded the 4 per cent medium-term target for 50 consecutive months.