Surging Wheat Prices Set Record in India Amid Supply Crunch

Indian wheat prices have hit a record high due to limited supplies and strong demand from flour mills. The price surge could impact retail inflation and influence central bank interest rate decisions. Government interventions have failed to stabilize prices, highlighting the need for increased sales from reserves.

Indian wheat prices have reached an unprecedented high, driven by dwindling supplies and robust demand from flour mills, industry officials reported to Reuters. This price surge threatens to push retail inflation higher, potentially impacting future central bank interest rate decisions.

Despite New Delhi's efforts to curb price increases by reducing stock limits for traders and millers, wheat prices continue to soar, trading at around 33,000 rupees per metric ton in the capital, considerably higher than April's rates. Flour mills struggling to secure sufficient supplies face operational challenges, as noted by Ajay Goyal of Shivaji Roller Flour Mills.

While the government has announced plans to release additional wheat from state reserves, the volumes fall short of past distributions, raising concerns over continued supply shortages. Private sales have dwindled, putting pressure on state reserves, which began December with stocks below the five-year average. The situation underscores the urgency for the government to enhance wheat distribution to balance the market demand.

(With inputs from agencies.)