“We do not anticipate any reduction in milk prices till November,” RS Sodhi, President, Indian Dairy Association,last month told FE. The stability in milk prices is expected only by winter months, he had earlier said.

The finance ministry last month attributed the elevated milk inflation to a demand supply mismatch and said it could be one of the factors apart from volatile international crude oil prices and constrained supplies of milk would influence the country’s inflation trajectory.

A combination of high cost of feed and raw material, and supply challenges, lumpy skin disease (LSD) and rising dairy exports has impacted milk production and costs, leading organised players, including Mother Dairy and Amul, to hike milk prices multiple times in the last one year.

“Milk production has been impacted by a lumpy skin disease infecting millions of cattle in late 2022,” the ministry said in the monthly economic review, adding that the vaccination drive against the disease is expected to curb the spread and immune the cattle against the skin disease. “While this would increase milk supply, a general drop in inflation will moderate the fodder and transport costs, thereby lowering milk inflation,” it said.

For the first time in decades, the country’s milk production is likely to have stagnated in 2022-23 due to LSD in cattle across several states and the lagged effect of Covid-19 in the form of stunting of the animals, a senior official with department of animal husbandry and dairying last month has stated. The milk production was estimated at 221 million tonne in 2021-22.