Here's why wheat prices touched 12-years record high in April 2022

Amid a steep inflation in the country, particularly of daily consumer non-durables, reports suggest that the monthly average retail price of atta (wheat flour) in the country touched Rs 32.38 per kg in April. This is the highest since January 2010, meaning the highest in over 12 years. 

Atta prices have been rising as both production and stocks of wheat have fallen in India, and demand has risen outside the country. Furthermore, State Civil Supplies Departments to the Union Ministry of Consumer Affairs, Food and Public Distribution data suggest that the all-India average retail price of wheat flour was Rs 32.78/ kg on Saturday, May 7.

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This is 9.15% higher than the price (Rs 30.03 per kg) a year ago. Of the 156 centres for which data are available, the price on Saturday was the highest in Port Blair (Rs 59/ kg) and lowest (Rs 22/ kg) in West Bengal's Purulia. Inflation is running higher for items that are purchased frequently, which has a big impact on consumer expectations.

India's Consumer Price Index inflation rose to a 17-month high of 6.95% in March 2022, exceeding the Reserve Bank of India's inflation target for three consecutive months. The prices of wheat and wheat products in the country have gone up by 15-20% while global wheat prices are at a 14-year high.

Reasons behind steep price rise of wheat

1. With rising global wheat prices, there is a growing demand for wheat to be exported.

2. Both production and stocks of wheat have fallen in India, and there is strong export demand for the foodgrain outside the country. 

3. The escalation in global wheat prices is driven by the ongoing Russia-Ukraine war, which has led to massive supply disruptions.

4. Russia and Ukraine are major producers of wheat. Russia is the second-largest exporter of wheat while Ukraine is the fourth largest.

5. India exported 70 Lakh Metric Tonnes (LMT) of wheat during the financial year ended March 2022.

6. In the current financial year, the export is likely to be higher as the Russia-Ukraine conflict has created a shortage of supply globally.

7. The early onset of summer this year is also a big reason for the decline in wheat production in the country.

8. Government had set a wheat production target of 110 million tonnes for 2021-22, higher than estimated production of 109.59 million tonnes in 2020-21. 

9. Record rise in temperatures in March dampened the government's expectations of record production and will fall short of the target.

10. Due to this, along with wheat flour, the prices of bakery bread too have registered a sharp increase in recent months.

11. International prices of wheat and rising fuel costs have a spillover effect on commodities used for ethanol production like corn and wheat. 

12. The high domestic price of diesel has added to the logistics cost of both wheat and flour. 

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Price rise data

Among the four metros, the average wheat flour retail price was the highest in Mumbai (Rs 49/ per).

This is followed by Chennai where retail price of wheat was (Rs 34/ kg), Kolkata (Rs 29/ kg) and Delhi (Rs 27/ kg).

All-India average daily retail prices of wheat flour increased by 5.81% since January 1, the data show.

The record high in April was significantly higher than the average retail price of Rs 31/ kg recorded in April 2021.

The retail inflation, based on the Consumer Price Index of non-PDS wheat/atta reached 7.77% in March 2022.