Rabi MSP hike to have muted impact on inflation: Report

New Delhi [India], October 4 (ANI): The government's recent announcement of Minimum Support Price (MSP) hikes for six rabi crops is expected to have a limited impact on retail inflation, according to the ICICI Bank Global Markets report.

On October 1, 2025, the Centre announced revised MSPs for the 2026-27 rabi marketing season, with increases ranging from 4.0 per cent to 10.1 per cent across key crops such as wheat, barley, gram, lentils, mustard, and safflower.

In line with the Union Budget 2018-19 commitment, the MSPs have been set at least 50 per cent above the all-India weighted average cost of production. The margin over production cost is notably high--109 per cent for wheat, 89 per cent for lentils, and 93 per cent for rapeseed & mustard, reflecting the government's focus on ensuring remunerative prices for farmers and encouraging crop diversification.

The new MSP for wheat, India's main rabi crop, has been increased by 6.6 per cent to Rs 2,585 per quintal, while barley is set at Rs 2,150 (+8.6 per cent), gram at Rs 5,875 (+4.0 per cent), lentils (masur) at Rs 7,000 (+4.5 per cent), rapeseed & mustard at Rs 6,200 (+4.2 per cent), and safflower at Rs 6,540 (+10.1 per cent).

Despite these hikes, the Consumer Price Index (CPI)-weighted average MSP increase stands at just 5.6 per cent, lower than 5.9 per cent in 2025-26 and 5.8 per cent in 2024-25.

The report notes that while MSP revisions do influence inflation, their actual impact depends on several factors including buffer stock levels, weather patterns, and supply chain stability.

With good reservoir levels and ample buffer stocks, the report expects retail food prices to remain stable for the remainder of the year, even with the higher MSPs in place.

"However, we expect muted MSP hikes, good buffer stocks and higher reservoir levels to keep retail prices low in the remainder of the year," the report added. (ANI)

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