August 2020, South Asia

Ratings agency Crisil said it expects India’s retail food inflation, measured through the Consumer Price Index (CPI), to ease in the second half of this financial year owing to the effect of high base of previous year coupled with a bumper rabi harvest and good prospect of kharif harvest.
The key risk to this forecast remains the rate of spread of Covid-19 in rural areas, which may adversely impact the harvest and the supply chain, pushing up retail food prices, it said.
“Since the lockdown began in late March, wholesale and retail food prices have diverged. In April-July, the average WPI (Wholesale Price Index) food inflation was 2.9%, while CPI food inflation was 9.8%. Farmers didn’t benefit from this divergence,” said DK Joshi, chief economist, Crisil.
Joshi was speaking at a webinar on the agricultural sector. “We expect CPI food (inflation) to decline for two reasons. High base effect of last fiscal will exert downward pressure in the second half of the current fiscal (CPI food inflation was 10.9% in the second half of 2019-20). Secondly, a bumper rabi harvest and good prospects for kharif crop will also help tamp down food inflation,” he said