Food inflation, which is 6.61 percent, significantly higher than the overall inflation rate, is what has sparked concern. Cereals, pulses, and vegetables, whose costs have fluctuated recently, are the main causes of food inflation.
Source: Hindustan Times
Governor Shaktikanta Das of the Reserve Bank of India cautioned that headline consumer price index inflation is still susceptible to recurring and overlapping food price shocks, indicating her concern over the rising cost of food.
Seasonal causes generate significant changes in vegetable prices. Inflation was caused by the skyrocketing costs of tomatoes in July and August, but they have already dropped. Due to issues with production, onions are currently selling for a premium price. Vegetable prices rise and decrease quickly because they are impacted by short-term crop cycles.
Inflation on vegetables decreased from 37.4% in July to 2.7% in October. Vegetable crops are more sensitive to weather-related factors, crop concentration in specific areas, and distribution and storage concerns, hence an effective technique to counteract vegetable price volatility has not yet been developed. One major drawback of many veggies is their perishability. In these regards, pulses and cereals are superior to vegetables. Thus, the decrease in vegetable price inflation should not be cause for complacency.
Source: Editorji
Though there are more protections against it than in the case of vegetables, the inflation brought on by the increase in the cost of cereals and pulses should be a bigger concern. This is due to the fact that it typically lasts longer and impacts essential dietary needs. Cereals and pulses make up more of food than veggies.
For the past 14 months, retail cereal inflation has been in double digits, currently standing at a high 10.65%. At this point, pulse inflation is elevated at 18.79 percent, the highest level in the previous seven years. The primary cause of the decline in cereal and pulse production has been climate change, and this trend may continue into the upcoming crops. The poorer segments will be severely impacted by ongoing food inflation, which is also likely to fuel overall inflation. Therefore, rather than fighting inflation generally, the battle against food inflation should be undertaken primarily.
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