India’s food price inflation soars
July 12, 2022 - Food costs, which make up nearly half of India’s consumer price index (CPI), rose 7.97% year-on-year in May, pushed by edible oil and vegetable prices which continue to spiral upwards.
India’s poor, that struggle to live on less than $2 per day, are now bearing the brunt of rising food costs as Russia’s war on Ukraine trigger steep gains in commodity prices around the world.
In May 2014, when Prime Minister Narendra Modi took charge, pledging to bring down prices, India’s headline inflation was 8.33 per cent. Now, as the consumer food price index hovers just below eight per cent, Modi’s government has cut fuel taxes while the Reserve Bank of India has begun raising interest rates for the first time in nearly four years.
But those efforts have come too late to prevent further price rises. According to a Nomura Holdings report, India’s food inflation is likely to top nine per cent in the second half of 2022.
“We see upside risks from food inflation,” said Goldman Sachs.
A Reuters poll of 42 economists between July 4-8 showed inflation as measured by the CPI was steady at an annual 7.03 per cent in June versus 7.04 per cent in May.
The poll suggests that inflation would be above seven per cent for the third consecutive month and above the Reserve Bank of India’s six per cent target band for a sixth month. RBI Governor Shaktikanta Das said inflation was unlikely to fall below its six per cent top-end until December.
- India’s poor bear brunt of food inflation caused by conflict (Financial Times)
- Consumer price index for May 2022 (National Statistical Office)
- Despite Having World's Richest People, Why India Has Failed To Eradicate Poverty (India Times)
- India's food inflation likely to top 9% in second half of 2022 (Bloomberg)