• Abhijit Maheswari

Price analytics - Cooking oil and vegetables prices are not agreeing

Updated: Mar 2

In this post, I present a visual analysis of consumer price data. First, we compare Jan 2021 with Dec 2020. We identify some key pattern and drill down further. Incase you wish to look at general price volatility, I have written about it here.

Below are key observations from the heatmap. It looks at states and the key categories for which inflation/prices are tracked. And we break it down into Urban and rural market.

1. Oil and fats which covers most cooking oil used in India is feeling price pressure. On an average the index is up by 4% since Dec 2020, while vegetables saw double digit drop across states. In states like Bihar, Chattishgarh, the monthly drop in vegetable prices are close to 20%. Except Karnataka and Kerala, the drop is very significant. This trend mirrors in both urban and rural market. We look at the relationship between oil & fats and vegetables in detail plots below.

2. Baring Himachal Pradesh, Andhra Pradesh and West Bengal, egg prices have dropped across India.

3. The price index covering education is up by 7% in Delhi.

4. Sugar and confectionery prices have also cooled off in Jan.

Rural prices (%) changes (Jan 2021 vs Dec 2020)

Urban prices (%) changes (Jan 2021 vs Dec 2020)

Monthly Price (%) Change for rural India in Jan 2021

Monthly Price (%) Change for rural India in Jan 2021

Now, let use look at vegetables and oils and fats and its constituent elements. By drilling down we get a more clearer picture.

Vegetable price index covers beans, brinjal, cabbage, carrot, cauliflower, garlic, ginger, pumpkin, green chilies, lady finger, lemon, onion, palak, parwal/patan, peas, potato, tomato, radish.

Except lady finger and parwal, kundru - most vegetables have dropped in prices in the range of 5% to 30%.

Drilling oils and fat further, tells us that almost all types of oil used for household consumption, mostly cooking oil have increased in prices. What could be the explanation ? Sourcing pressure or its demand ? Interestingly, ghee (part of milk products and not plotted here) has dropped in prices.

Below, we build an statistical relationship between vegetables and oils & fats. At lower index level, both the prices are positively correlated but this pattern breaks when vegetables crosses 220 mark (this was seen in last two cycles).

As you can see the oils and fats price trends has been on upward trajectory for last 12 months, grown by 19% since January 2020.

Consumer price index (CPI) data gives the first sign of whether there is movement in the economy - supply pressure, demand pressure etc. And in India this is very comprehensive covering all the states. The data is captured every month. It covers areas in economy which has direct engagement with consumers and household. There is an ongoing initiative of mobile data collections. This would lead to faster data releases and more accurate data. We will wait to see its coverage, whether its for essential goods or across all categories.

As a data scientist, I would love to map this data (CPI) with other data like stock market, google, banking, other market data, including alternative data and find the relationship, if any. This would be interesting area of research. It will be like a new exploration where you don't know about the kind of experience you will have but the thrill of finding something novel, is a big enough motivation.

I would invite you into this too. You can go through the charts and if you find insights I have missed, do share in the comments.

If you have any suggestion or have worked with similar data, I would love to hear from you.