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Food inflation in India is defined as an increase in the wholesale price index of a required food item relative to the general index or the consumer price index (CPI). In simple terms, food inflation is the continual increase in the cost of a food item.
In India, a gradual increase in food prices may be attributed to the lack of resources in the agriculture sector. Apart from this, the most important factors for inflation in food items in India are climatic change, Covid, and rise in fuel and transportation costs.
According to the Statistics Ministry, consumer prices increased by 6.1 percent last month compared to the previous year. This increase is higher than the median estimate of 6% predicted by the Bloomberg survey of economists.
Increase in the cost of items
An increase in the cost of footwear, food, and clothing, coupled with rising global prices of edible oils were seen last month. The food price increased up to 5.9%, clothing and footwear prices increased up to 8.9% and household products went up to 3.6%. There was also an 8.7% increase in fuel and power prices.
The war in Ukraine has raised the costs of crude oil. This has had a ripple effect, increasing the transportation costs of crops, among other things. This caused a rise in crop trading prices, adding to food inflation.
In February 2022, food inflation in India increased up to 5.85%. From November 2020, the highest reading observed was that the price of oil and fat increased up to 16.44%, fish and meat prices increased up to 7.45%, and the price of vegetables increased up to 6.3%.
Factors affecting food inflation in India
Inflation in India has risen for a variety of causes. The two main factors affecting the food inflation are as follows:
- Climatic conditions
The leading cause of inflation in food items in India is climatic conditions. Adverse climatic conditions can severely harm crops. Unseasonable rainfall can lead to flooding or drought. So, the rate of the crops increases in the market.
- Transportation costs
The second leading cause of food inflation in India is increased transportation costs. The cost of transportation and the price of fuel is already high and rising each day. Traders who transport crops from one place to another, pay more. But they do not make as much profit as they used to. This compels them to increase the rate of the crops, in a bid to cope with losses incurred in transportation.
Aspects of food inflation
Food inflation affects all countries. When there is a rise in food prices in developed countries, it can cause major and minor inconveniences. Because of the high standard of living in these countries, it is possible for most of the population to bear these difficulties. However, this is not the case in under-developed and developing countries. An increase in food prices can lead to untold hardships, with a large section of the population unable to cope, rendering them helpless in a dire situation.
Conclusion
There are many factors for food inflation in India, and the government has to make sure that they can maintain the rate of crops too. This is important to ensure that the food supply in India remains affordable.
