Saturday, November 26, 2022

Foodflation: Making life tougher

Life is being made tougher by rising prices and inflation for the common man Now-a-days, a new economic phenomenon, after inflation and afflation is taking place i.e. foodflation: prices of food items increasing sharply across major product groups. An interesting aspect of foodflation today is that it is not captured by the conventional WPI, and CPI numbers only touch the periphery of the issue. Wholesale price index (WPI) of India rose to 15.8 per cent in April this year, up from 10.74 per cent in April 2021, according to the Ministry of Commerce and Industry. Food inflation rose to 8.35 per cent in April 2022 from 4.60 per cent in April 2021. This list included items like cereals, paddy, pulses, wheat, vegetables, potato, onion, fruits, milk, eggs, fish and meat. Cereals inflation went up to 7.80 per cent in April 2022 from -3.07 per cent in April 2021 whereas paddy inflation went up from -3.16 in April last year to 10.70 per cent in April this year. Oil seeds inflation went down drastically from 29.95 per cent in April 2021 to 16.10 per cent in April this year while inflation in manufactured products went up from 9.44 per cent in April last year to 10.85 per cent in April this year.
Above the Reserve Bank of India’s (RBI) expectations, the Consumer Price Index (CPI) has clocked for the 30th successive month. Since the pandemic, India has struggled to keep prices in check. The last time that inflation was below 4 per cent was way back in 2019. Now with the Russia-Ukraine crisis, we are definitely feeling the pinch now. As per statement of Ministry of Labour & Employment, Point to point rate of inflation based on the CPI-AL and CPI-RL stood at 6.44% & 6.67% in April, 2022 compared to 6.09% & 6.33% respectively in March, 2022 and 2.66% and 2.94% respectively during the corresponding month of the previous year
For households that reel under even the slightest price rise, such staggering highs bring only further misery. Have you noticed the increasing prices of edible oil, vegetables, fruits, and proteins lately? The humble lemon is being sold at Rs 400 a kilogram. A rise in fuel prices also means upping freight and energy costs, which in turn affects various industries and pushes up the price of commodities, products, and even restaurant food.
The major contribution towards the rise in consumer price index (CPI) based inflation for agricultural and rural labourers came from food group to the extent of 7.32 and 7.13 points respectively. This was due to an increase in prices of rice, wheat-atta, jowar, bajra, ragi, vegetables & fruits, etc. It’s the high prices that are hampering the lives of millions of Indians.
Inflation management would need to go beyond just the aggregate numbers. A greater attention to managing both inflation and inflationary expectations, both at an aggregate and granular level, is the need of the hour.
Prof Mithilesh Kumar Sinha, Department of Economics, Nagaland University,
Lumami

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