### Summary
Key diplomatic partners of India, including Singapore, Indonesia, and the Philippines, are urging India to resume rice exports to their countries after India suspended non-basmati shipments to control prices.
### Facts
- 🍚 Singapore has requested around 110,000 tonnes of rice from India. Indonesia planned to import 1 million tonnes of rice to protect against disruptions caused by the El Nino weather pattern, and the Philippines relies on India for rice supplies.
- 🌍 The UN World Food Programme has sought 200,000 tonnes of Indian rice for its humanitarian operations due to global food insecurity triggered by the Covid-19 pandemic and the Ukraine war. Bangladesh is also in talks with India for agricultural commodity supplies.
- 📉 India has taken measures, including export curbs, to control escalating food prices as retail inflation reached a 15-month high. Prime Minister Narendra Modi pledged to bring down inflation.
- 🛢️ The ban on non-basmati white rice exports has affected global rice prices. Neighboring countries like Bangladesh and Nepal heavily depend on Indian rice, while certain African countries purchase broken rice.
- 📈 Food and beverages inflation, which accounts for nearly 46% of the overall consumer price basket, rose to 10.57% in July. Economists predict that food prices will remain high for the next few weeks before cooling off in September.
Rice prices in Asia have surged to their highest level in almost 12 years due to India's rice export ban and adverse weather conditions, leading to concerns about food price volatility and potential shortages of other food commodities in the region. Factors such as extreme climate events, the onset of El Niño, trade restrictions, and protectionist food policies are contributing to the situation. While most Asian countries can withstand a supply shock in rice, there are concerns about the impact on overall farm output and consumer price inflation, particularly for vulnerable populations.
The Indian government's efforts to control food prices, such as imposing taxes and export bans, may help contain inflation domestically but could lead to higher prices globally, particularly for rice, affecting countries that rely on food imports.
The Philippines has implemented price controls on rice in order to protect consumers from inflated prices and curb inflation, with President Marcos setting maximum prices for regular and well-milled rice.
Philippine inflation unexpectedly quickened in August due to higher food and transport costs, putting pressure on the central bank to maintain its hawkish stance, and the government may consider reducing rice tariffs to help lower domestic costs.
Surging rice prices in the Philippines, caused by India's export restrictions, serve as a warning for other major importers as they rush to secure supply and contain rising costs.
Global food commodity prices declined by 2.1 percent in August, driven by falling prices of essential food items, excluding rice and sugar, according to the latest report from the Food and Agriculture Organization of the UN (FAO). Dairy products, vegetable oils, meat, and cereals experienced decreases in price indices, while the sugar price index showed moderate growth. The report also highlighted a significant surge in rice prices due to disruptions in the rice trade following India's ban on exporting Indica white rice.
The short-term inflation in Pakistan increased by 26.25% due to a rise in the retail price of vegetables, particularly tomatoes and onions, caused by the closure of the Torkham border with Afghanistan.
Singapore's consumer price index inflation eased slightly in August, largely due to softer services and food prices, although increased fuel prices continued to support inflation; however, the Monetary Authority of Singapore (MAS) expects core inflation to further moderate in the coming months.
A new study reveals that food prices in the United States have experienced an inflation rate of 5.7 percent compared to the global trend, with countries such as Venezuela, Lebanon, Argentina, Turkey, and Egypt being the most affected.
The unexpectedly high U.S. producer price inflation figures may cool the recent rally in emerging market and Asian stocks, with attention turning to Indian consumer inflation and other regional economic data.
