One-third of food inflation came from vegetables in 2023-24: Eco Survey

It became the second biggest contributor after cereals during the year, shows data from the Economic Survey

Rising vegetable prices played a larger part in driving up the overall food inflation in the country in financial year 2023-24 (FY24) compared to the previous year.

The contribution of vegetables and pulses were among those which rose the most in FY24, shows the Economic Survey 2023-24. Vegetables accounted for 30.6 per cent of the food inflation in FY24, compared to 7.3 per cent in the previous year. Meanwhile, the contribution by pulses has risen to 11.9 per cent from 2.2 per cent in the same period. Spice prices are also accounting for a larger share in food inflation than before. The prices of cereals, however, have the highest contribution to food inflation in FY24 even though this has fallen by four percentage points compared to FY23.

“Extreme weather events, lower reservoir levels and damaged crops” proved quite disruptive for food prices in general and for agriculture output in FY23 and FY24, the Survey notes. The average food inflation in the country almost doubled from 3.8 per cent in FY22 to 6.6 per cent in FY23. It spiked further to 7.5 per cent in FY24.

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The pressure on India’s agriculture sector is reflective of worldwide production challenges due to fallouts from climate change which have led to a spike in global food prices, according to the survey.

The unpredictability of the monsoon, delays in sowing and crop infestation in certain cases and trade-related measures taken by other countries impacted the production of certain vegetables like tomatoes and onions in FY23. The production of urad and tur was severely impacted by climatic disturbances which pushed their prices up.

Meanwhile, the contribution of oil, milk, meat and fish to food inflation has declined in FY24 compared to the previous financial year (chart 1).

The survey notes that the decline in domestic edible oil prices, which is significantly import-dependent (about half of the country’s edible oil requirement is being imported), is “broadly correlated” with the “downward trend” in the Food and Agriculture Organisation’s edible oil price index.

The recent inflation figures for June also show that inflation in vegetables and pulses considerably exceeds the overall retail inflation rate. Vegetable inflation was 29.3 per cent. Inflation in pulses was at 16.07 per cent while overall food inflation stood at 8.36 per cent (chart 2).

The Survey notes several government measures taken to ensure “an adequate supply of essential food items.” These measures include open market sales, retailing in specific outlets, timely imports in addition to an extension of the Pradhan Mantri Garib Kalyan Anna Yojana, which covers over 81 crore beneficiaries, for another five years.