MUMBAI: Indian wheat prices surged to an eight-month high on Tuesday, propelled by strong demand for big festivals, limited supplies and as import duty makes overseas buying unfeasible for domestic flour mills.
The increasing prices may prompt the government to release more stocks from inventories and eliminate import duties on the cereal to bolster supplies and control prices ahead of important state assembly elections and a general election next year. Rising wheat prices could contribute to food inflation.
Wheat prices in New Delhi jumped by 1.6% on Tuesday to 27,390 rupees ($329) per metric ton, the highest since Feb. 10. Prices have surged by nearly 22% over the past six months.
“Festival season demand is driving up wheat prices. The government needs to permit duty-free imports to reduce prices,” said Pramod Kumar S, president of the Roller Flour Millers’ Federation.
India has no immediate plans to abolish a 40% import tax on wheat, Sanjeev Chopra, the most senior civil servant at the food ministry, said last month.
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