Global food prices continue to dip
The FAO’s food price index for February dipped by 14% over a year ago and declined by 1% sequentially
International food price trends remain soft. The Food and Agriculture Organization’s (FAO) food price index for February dipped by 14% over a year ago and declined by 1% sequentially. Declining prices of sugar and cereals were the main contributors, but dairy products and vegetable oil (mainly palm oil) have seen prices increase. Comfortingly, India’s food inflation has been benign and wholesale food prices have declined sequentially every month since August. But there is one worry. Crop area in the rabi season is down 6.3% as of 13 February, and unseasonal rains could further affect output. Also, as Reserve Bank of India governor Raghuram Rajan said in his monetary policy statement on Wednesday: “Food prices will be affected by the seasonal upturn that typically occurs ahead of the south-west monsoon and, therefore, steps the government takes on food management will be critical in determining the inflation outlook." Low prices and comfortable foodgrain stocks do give the government legroom to keep prices in check.
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