Wheat Rate: Wheat prices at record high, inflation to increase

New Delhi| Wheat prices hit record highs on Monday due to dwindling supply amid strong demand from flour mills. Retail inflation is likely to increase due to record prices. If inflation increases, it may affect RBI’s decision to cut interest rates.

According to flour mills, the supply of wheat in the market is limited. Flour mills are not able to operate at full capacity even after paying record prices. In December, the government reduced the stock limit for traders to increase grain availability and control prices. However, this approach of the government failed to reduce the prices.

Even after the above decision of the government, wheat prices in New Delhi are trading at around Rs 33,000 per tone. In April, it was more than Rs 24,500. Also, the minimum support prices for last season’s crop were much higher than Rs 22,750. Mill owners say the storage cap failed to improve supply and bring prices down. This shows that private companies have some supplies and the government needs to sell more wheat from its reserves to wholesale customers.

FCI is selling wheat every week
Food Corporation of India (FCI) is selling 100,000 tones of wheat to wholesale customers every week, but it is not enough to meet the demand. In November the government had announced plans to sell 2.5 million tones of wheat from state reserves to wholesale customers in the year ending in March 2025. This is much less than the approximately 10 million tones sold last season. FCI has limited wheat, due to which it is not able to give much wheat to private companies. Wheat stocks in state warehouses stood at 20.6 million tones at the beginning of December, up slightly from 19.2 million tones last year.

Government will soon take a decision on increasing the minimum support price of sugar: Joshi
Food and Consumer Affairs Minister Pralhad Joshi said that the government will soon take a decision on increasing the Minimum Support Price (MSP) of sugar. The MSP of sugar is Rs 31 per kg. This rate was fixed in February 2019. Joshi said on the sidelines of a program that there is a demand to increase the MSP of sugar. The ministry is considering this matter. We will soon decide whether MSP should be increased or not. The Indian Sugar and Bio-Energy Manufacturers Association (ISMA) and the National Cooperative Sugar Factories Federation (NFCSF) are pushing to increase the MSP to Rs 39.14 per kg or Rs 42 per kg to improve production costs and support the financial condition of sugar mills.