The sustained rise in the rate of food inflation has caused problems for the Reserve Bank of India, as well as the election-bound central government. As Table 1 reveals, food inflation has increased since the beginning of 2012. The rate of retail food inflation for urban households has been higher than the wholesale food inflation rate in recent months - a trend that has just reversed. It is worth noting that the price of cereals has also risen, but inflation has also decreased in that category recently, as Table 2 shows; and pulses, shown in Table 3, have in fact experienced low inflation or sharp deflation, according to the Wholesale Price Index.
So, as Table 4 shows, the general increase in food inflation is being driven by protein-rich eggs, fish and meat, which have experienced volatile but high inflation; and, above all, vegetables, shown in Table 5. From deflation at the beginning of 2012, vegetable price inflation has reached truly startling dimensions now, onions being a particular offender.
Other major components of spending, like fuel and light, have seen a reduction in the overall inflation in the past two years, according to Table 6. But, it is sufficiently high to keep the retail inflation rate close to double digits, as shown in Table 7. Retail inflation remains significantly higher than wholesale inflation and is much higher than core inflation in particular, which has been sharply reduced by policy and the slowdown, Table 8 shows. (Click here for table)
So, as Table 4 shows, the general increase in food inflation is being driven by protein-rich eggs, fish and meat, which have experienced volatile but high inflation; and, above all, vegetables, shown in Table 5. From deflation at the beginning of 2012, vegetable price inflation has reached truly startling dimensions now, onions being a particular offender.
Other major components of spending, like fuel and light, have seen a reduction in the overall inflation in the past two years, according to Table 6. But, it is sufficiently high to keep the retail inflation rate close to double digits, as shown in Table 7. Retail inflation remains significantly higher than wholesale inflation and is much higher than core inflation in particular, which has been sharply reduced by policy and the slowdown, Table 8 shows. (Click here for table)