The dramatic increase in food prices after the Russia-Ukraine conflict is now decreasing as geopolitical conditions have improved. Consumer food price inflation in India fell to 6.75 percent, a five-month low.
The monthly budgets of people will be considerably impacted by the decrease in food prices. According to the Central Statistics Office, food and beverages makeup, 45.86%, nearly half of India's overall consumer price inflation.
However, it is not just India where food prices are declining. The overall trend is changing globally. In July 2022, the FAO Food Price Index decreased for the fourth consecutive month, dropping 8.6% from June.
According to the Food and Agriculture Organization of the United Nations, "The July decline was the steepest monthly fall in the value of the index since October 2008, led by significant drops in vegetable oil and cereal indices, while those of sugar, dairy, and meat also fell but to a lesser extent."
The FAO vegetable oil price index decreased 19.2% percent (to a ten-month low) and the FAO cereal price index was down 11.5 percent sequentially. According to the FAO, the agreement made between Ukraine and the Russian Federation to open Ukraine's main Black Sea ports contributed to a drop in global wheat prices of up to 14.5% in July.
How much does India depend on International Vegetable Oil Prices?
In July, global palm oil prices fell for the fourth straight month. Since around 56% of India's domestic need for edible oils is satisfied by imports, the drop in worldwide vegetable oil prices is quite significant. Out of this, palm oil constitutes about 54 percent, according to the Department of Food & Public Distribution.
In the following days, prices in India are expected to decrease even more due to the decline in the price of food commodities internationally.
“Domestic edible oil prices are expected to soften further on the back of improving supplies from key producing countries and the government’s supply-side interventions. The resumption of wheat supply from the Black Sea region, if sustained, could help temper international prices,” as stated by the Reserve Bank of India.
