This seen in the context that previous year’s food inflation figures were already at a high of 10% and on this high base an increase in 20% is even more alarming. The inflation rates are calculated at wholesale levels so the prices at retail levels are even higher hitting the common man very steeply. Potato price has seen a rise of more than 136% on a year-on-year basis. Prices of vegetables, pulses and cereals, which constitute the essential items of consumption, rose at high rates of 13.55%, 40.81% and 41.01%, respectively for the week under consideration.
Causes of Food inflation globally
Climate changes: The variation in climate across the countries of the world has thrown the crop patterns in disarray. The unexpected droughts in Australia have affected the growth of wheat. In India, due to large-scale floods in many parts, the prices of essential commodities like pulses eg. Tur dal, potatoes, onions, tomatoes, sugar etc. have gone through the roof. The dangerous effects of global warming on our climate is also manifesting in the form of crops being destroyed.
Farmers switch to better options: The cultivable area for agriculture is shrinking every year. As middlemen make profits, the poor farmer gets poorer each year. Hence he is switching to better options of cash crops from food crops thereby further reducing the supply of essential items.
Government and trade policy: The prices of essential commodities rise much more than is warranted because of hoarding by traders. Traders seek larger profits by hoarding the supplies with them and by creating a panic among consumers about shortages. The government is unable to have stringent policies to check this illegal hoarding, speculation and trading.
Imports are expensive: As all over the world food production declines, the cost of importing goods is high and hence the common man gets no respite from the rising prices even if the supplies improve.
Better rabi crop harvest and stricter governmental controls are the only way ahead to provide some respite from the steeply increasing prices. Every consumer in India is praying for some relief from the rising prices in the near future. By blaming a certain minister i.e. Mr. Sharad Pawar or a certain party, we would certainly not achieve anything. The whole distribution system and the trader-politician nexus also has to be dismantled. Let the economist and the pragmatist prevail.
Very insightful post 🙂
Thank you, Divsu:)
there was a good article on toi on soya vs pulses prices..
well said.
even if Pawar had not done a good job, blaming him won’t solve problems..
@Wise donkey Yep, I remember reading that article you are talking about and thanks!