Source: Indian CPI basket released by MOSPI (weights are changed to suit an urban non vegetarian kitchen).
Insights
- The cost to cook a portion of the good old Punjabi chicken curry in an average chicken eating Indian household has been rising at a CAGR of 10% over the last 5 years!
- Costs zoomed with the COVID’19 lockdowns in Mar’20. Initially volatile vegetable and meat prices, and later, energy inflation ensured a steady rising hole in the common chicken eating Indian’s wallet.
- In contrast to conventional financial theories (postulating rising interest rates when inflation is high), interest rates (borrowing costs) went on declining during this period when curry was getting expensive! 1 year average MCLR dipped from 9.03% in Mar’19 to 7.76% by Mar’22, fanning leveraged consumer demand.
- While monetary policy justifiably was overwhelmed with growth concerns during the last two years, it is extremely important to catch up to the curve and raise rates aggressively. What started as a supply side inflation, has evolved into a demand led one and any delay now will set off a vicious price cycle.
- We at TruBoard were surprised at the status quo maintained by RBI and MPC in its Apr’22 policy meet. We actually predicted an out of turn (in between meeting) rate hike: http://blogs.truboardpartners.com/retail-inflation-render-indians-poorer/
About the TruBoard Chicken Curry Index
What does it measure?
The index is a proxy for non vegetarian food inflation and tracks the weighted aggregate cost of cooking a basic chicken curry. The base value of the Index is Rs 300 in Mar’2017. The latest reading of Rs 485 in March’22 indicates a CAGR of ~10% in last 5 years, (vs RBI’s upper tolerance of 6% retail inflation).
(TruBoard also computes a Paneer Masala Index for the vegetarians, and latest trend suggests a 7% CAGR in last 5 years!)
How is it calculated?
Based on the age-old Punjabi recipe for cooking chicken curry, price levels for the following is sourced from CPI levels reported by Ministry of Statistics and Programme Implementation (MoSPI):
- Chicken
- Onions
- Tomatoes
- Ginger
- Garlic
- Refined edible oil
- LPG
The weightages assigned to each ingredient as per quantity required to cook 1 kilogram of chicken following a conventional Punjabi recipe to cook chicken.
TruQuest is knowledge series launched by TruBoard Partners providing succinct updates and views on:
- Liquidity outlook
- India’s macro economic view
- Trends within the infrastructure, Real Estate and Renewable Energy sectors
- Impact analysis of new regulations and policies on lending and capital flow
Author:
Debopam Chaudhuri, Head of Research and Ratings
+91-9819239926, dc@truboardpartners.com
Author:
Debopam Chaudhuri
Head of Research and Ratings
+91-9819239926
dc@truboardpartners.com
Disclaimer
The data and analysis covered in this report of TruQuest has been compiled by TruBoard Pvt Ltd and its associates (TruBoard) based upon information available to the public and sources believed to be reliable. Though utmost care has been taken to ensure its accuracy, no representation or warranty, express or implied is made that it is accurate or complete. TruBoard has reviewed the data, so far as it includes current or historical information which is believed to be reliable, although its accuracy and completeness cannot be guaranteed. Information in certain instances consists of compilations and/or estimates representing TruBoard’s opinion based on statistical procedures, as TruBoard deems appropriate. Sources of information are not always under the control of TruBoard. TruBoard accepts no liability and will not be liable for any loss of damage arising directly or indirectly (including special, incidental, consequential, punitive or exemplary) from use of this data, howsoever arising, and including any loss, damage or expense arising from, but not limited to any defect, error, imperfection, fault, mistake or inaccuracy with this document, its content.