As the high-frequency data shows that inflation is not threatening holistically, the Bank of Baroda Essential Commodity Index (BoB ECI) inched up by five per cent in July 2024 on a year-on-year (YoY) basis. The headline estimate of the consumer price index (CPI) stood at 3.8 to 4 per cent in July 2024, according to a report from Bank of Baroda. On a month-on-month (MoM) basis, the BoB ECI rose by 2.1 per cent in July 2024, compared with 1.7 per cent in June.
The volatile items under the CPI index led to an increase of 1.3 per cent in the headline index in June. The weight of such items increased by 37.7 per cent, potentially leading to a 2.1 per cent increase in the CPI in the July month, according to the report.
The BoB report noted a loss of momentum in the prices of several essential commodities such as rice, pulses and edible oil, especially mustard and sunflower oil. Tomato, Onion and Potato (TOP) topped the inflation chart with a rise of 57.3 per cent, 21.4 per cent and 16.2 per cent respectively in July 2024. However, the increase in BoB ECI remained lesser at 1.5 per cent in the month.
The excess rainfall or heat waves have affected the May and July transplanting along with the July harvest of tomatoes, which is expected to cause a rise in the prices, according to the report. As several parts of Maharashtra and Karnataka are facing the pressure of excess rainfall, the July sowing of Onion is also expected to have been impacted, the report stated.
To control the prices, the report suggested a few measures. It included a direct price intervention by the government and the stock limits or export duties in the short run. To check volatility in the long run, the report suggested introducing large-scale clusters for vegetable production in proximity to the major consumption centres could prove to be fruitful.
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