Pulses inflation to rise further in 6 months

In the past five months inflation rate of pulses has nearly doubled and is likely to rise further in the next 6-7 months, CRISIL said in a report.

Prices of pulses have surged in the recent months due to spillover from some crop damage last year as well as ongoing monsoon disturbance. However, volatility in pulses inflation has come down due to government interventions, the rating agency said.

When measured at the Wholesale Price Index (WPI) level, inflation rate in pulses stood at 5.8 per cent in May, while at the Consumer Price Index (CPI) level, it was 6.6 per cent.

In the food inflation basket, pulses have a 6 per cent weight and hence any sharp increase in prices can hurt household budgets.

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In a research report, the rating agency noted that the “periodic ups and downs in pulses inflation is not new.” In fact, the volatility in pulses inflation has come down in the recent years.

Peak inflation in pulses this year is likely to be less pronounced than seen in the episodes of inflation spikes over the last two decades, it said. In 2015-16, pulses inflation had surged to a peak of 49 per cent, while in 2017-18 it dipped to -35.2 per cent. Pulses inflation peaked to 23.1 per cent in 2019-20 and dipped to 3.1 per cent in 2021-22.

The last pulses inflation trough was in May 2022, after which it has again started picking up. The typical time between trough to next peak has been 1.5 years. Going only by that calculus, pulses inflation could move northwards for another 6-7 months to touch its next peak, the rating agency said.

Past two decades of analysis shows a sharp fluctuation in pulses inflation every three years. “But, recent trends indicate peaks and troughs in inflation have become less pronounced due to proactive policy interventions,” CRISIL noted in the report.