The flour mill associations in a press event a few weeks ago expressed the hope of lowering the price of flour and its effect on the consumer price index, saying that this could provide relief to the government struggling with high prices. However, the recent rains in major wheat producing states have dashed the hopes.
The data shows that between March 11 and March 23, unseasonal rains damaged the wheat crop in Madhya Pradesh, Uttar Pradesh, Punjab and Haryana, leading to an increase in the price of better quality wheat by about Rs 50 per quintal. Whereas the price of poor quality wheat is below the minimum support price.
Crisil Ratings has said in its research report, ‘Wheat production may decrease by 3-4 percent due to hailstorm in Madhya Pradesh and Gujarat. The damage caused to wheat, paddy, cumin, onion, tomato and mango crops will affect its price.
The trade data shows that the price of wheat in the Indore mandi was Rs 1,800 to Rs 2,400 per quintal on March 11, which increased to Rs 1,850 to Rs 2,450 per quintal on March 23. Similarly, wheat was being traded at Rs 2,050 to Rs 2,500 per quintal on March 11 in Rajasthan’s Kota mandi, which reached Rs 1,950 to Rs 3,000 per quintal on March 23.
However, the inflation data shows that in February 2023 (for which the latest data is available), the inflation rate of wheat in the Wholesale Price Index has come down from 23.63 percent in January to 18.54 percent. Inflation based on the Consumer Price Index (which includes flour) increased from 25.05 per cent in January to 25.37 per cent in February during this period.
This shows that even though the price of wheat has come down in the wholesale market, the price decline at the consumer level is yet to take place.
The quality of wheat has deteriorated due to heavy rains and hailstorm, which is fetching low prices in the market. The central government has decided to sell about 50 lakh tonnes of wheat, this has also affected the price of wheat.
So far, millers and traders have bought about 38 lakh tonnes of wheat out of 50 lakh tonnes.
