The inflation is getting a flavorful boost from your curry blend, as the prices of cumin, turmeric, chili, black pepper, and other spices skyrocket due to reduced crop acreage and pest infestation affecting their production.
The inflation in spices has consistently exceeded 22% since July. Economists predict that it may contribute an additional 0.6 percentage points to retail inflation from December to March, as prices are expected to persistently remain high until the next harvest.
While the category holds a modest 2.5% weight in the inflation basket, its impact extends to the prices of numerous food products.
“For spices, the weight is lower, but the higher prices feed into the costs of other food products such as sauces, packed foods, masalas, jams, confectionery, etc,” said Madan Sabnavis, chief economist at Bank of Baroda.
“Cumin (jeera), pepper and chilly have witnessed lower output; hence, it is a supply issue. We have to wait for the next crop to come in before prices ease,” he said.
The cultivation area for essential spices in garam masala, including black pepper and coriander, has experienced a substantial decline. Reduced production during the kharif season has also contributed to this downturn. Experts suggest that the arrival of the new rabi crop by March 2024 is unlikely to alleviate the situation, as elevated domestic and export demand may continue to sustain inflation beyond that timeframe.
Jeera, experiencing triple-digit inflation over the past five months, holds a mere 0.37% weight in the inflation basket. In November, its prices surged by 122.6% compared to the previous year.
The cultivation of turmeric during the kharif season witnessed a decline of 15-18%, resulting in prices reaching INR 12,600 per quintal this year, compared to INR 7,000 per quintal in the previous year. Both turmeric and dry chillies experienced a 10.6% inflation in November. Biplab Sarma, a spice analyst at the agricultural research firm Agriwatch, mentioned a 30% decrease in coriander acreage, anticipating a subsequent increase in prices.
