{"id":115175,"date":"2021-06-29T12:01:01","date_gmt":"2021-06-29T06:31:01","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=115175"},"modified":"2021-06-29T12:01:01","modified_gmt":"2021-06-29T06:31:01","slug":"explained-will-food-become-costlier","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/explained-will-food-become-costlier\/","title":{"rendered":"Explained: Will food become costlier?"},"content":{"rendered":"\n<p><strong>Relevance<\/strong>: Global prices of major agricultural commodities in India and the reason behind divergence in prices, way forward<\/p>\n<p><b><span data-contrast=\"auto\">Synopsis:\u00a0\u00a0<\/span><\/b><span data-contrast=\"none\">Factors affecting Food inflation in India.<\/span><\/p>\n<h5><b><span data-contrast=\"none\">Background<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:1,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:420}\">\u00a0<\/span><\/h5>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"none\">Brent Crude prices ($76.18) had reached the highest since October 2018. <\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:1,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559737&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:420}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"none\">Since\u00a0the increase\u00a0in international oil\u00a0prices is\u00a0being fully passed on to Indian\u00a0consumers,\u00a0there is a concern that prices of Food will also increase.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:1,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559737&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:420}\">\u00a0<\/span><\/li>\n<\/ul>\n<h5><b><span data-contrast=\"none\">India\u2019s Scenario is different from Global Scenario<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559738&quot;:40,&quot;335559739&quot;:0,&quot;335559740&quot;:259}\">\u00a0<\/span><\/h5>\n<ol>\n<li><span data-contrast=\"none\">Global prices of major agricultural commodities,\u00a0have\u00a0increased compared to\u00a0their levels a year ago.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:1,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:420}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">Similarly, The\u00a0UN Food and Agriculture Organization\u2019s (FAO) world food price index (FPI) touched 127.1 points,\u00a0that is\u00a0the highest\u00a0value since September 2011.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:1,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:420}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">Whereas in\u00a0India the\u00a0increase in global food prices is not getting reflected in what consumers in India are paying.\u00a0For instance,<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:1,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:420}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">Annual consumer food price index (CFPI) inflation in India, at 5% in May,\u00a0is\u00a0way lower\u00a0than the 39.7% year-on-year rise in the FAO-FPI for the same month.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:1,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:420}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">Interestingly,\u00a0Global food inflation crashed after March 2020\u00a0after the\u00a0impact\u00a0of the\u00a0Pandemic.\u00a0Whereas in India,\u00a0Retail food inflation\u00a0was\u00a0around double-digits till November.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:1,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:420}\">\u00a0<\/span><\/li>\n<\/ol>\n<h5><b><span data-contrast=\"none\">Reasons for the divergence<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:1,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:420}\">\u00a0<\/span><\/h5>\n<p><span data-contrast=\"none\">Understanding the\u00a0drivers of both global and domestic inflation will help us understand the reason for divergence<\/span><span data-ccp-props=\"{&quot;201341983&quot;:1,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:420}\">\u00a0<\/span><\/p>\n<ol>\n<li><span data-contrast=\"auto\">The drivers of\u00a0Global\u00a0food inflation are mainly due to,<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span>\n<ul style=\"list-style-type: circle;\">\n<li><span data-contrast=\"none\">Increase in demand due\u00a0to unlocking of economies.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">Chinese stockpiling for building strategic reserves, as well as in anticipation of fresh corona outbreaks.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">Production shortfalls in Brazil, Argentina, Ukraine, Thailand and even the US.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li><span data-contrast=\"none\">In India, by contrast\u00a0the\u00a0reduction\u00a0in food\u00a0inflation\u00a0is mainly due to two\u00a0reasons.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span>\n<ul style=\"list-style-type: circle;\">\n<li><span data-contrast=\"none\">One, good\u00a0monsoons in 2019 and 2020 that led to bumper kharif crop harvest.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">Two, the collapse of demand from successive Covid-triggered lockdowns.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li><span data-contrast=\"none\">India\u2019s food index has seen rise in edible oils and pulses mainly. These are the Agri-commodities that India significantly imports.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span>\n<ul style=\"list-style-type: disc;\">\n<li><b><span data-contrast=\"none\">Edible oil import<\/span><\/b><span data-contrast=\"none\">:\u00a0India imports\u00a013-15 million\u00a0tonnes every\u00a0year and produces just 7.5-8.5 mt.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"none\">Pulses Import<\/span><\/b><span data-contrast=\"none\">: India produces 22-23 Mt\u00a0and imports\u00a0h 2.5-3 Mt.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ol>\n<p><b><span data-contrast=\"none\">In the future, what are the possible factors that can impact Food Inflation in India?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">Food inflation in India in the coming months is likely to be influenced by four determinants.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<ol>\n<li><span data-contrast=\"none\">The first one is\u00a0<\/span><b><span data-contrast=\"none\">international prices<\/span><\/b><span data-contrast=\"none\">, that matters for edible oil and pulses as discussed above.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">The\u00a0second, determinant\u00a0is the\u00a0<\/span><b><span data-contrast=\"none\">monsoon\u2019s progress<\/span><\/b><span data-contrast=\"none\">. With 18% above-average precipitation\u00a0during\u00a0the southwest\u00a0monsoon\u00a0the Production is set to\u00a0increase. This\u00a0will help in controlling Food inflation at permitted levels.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559737&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">The third determinant is the\u00a0<\/span><b><span data-contrast=\"none\">extent of fuel cost increases being pass-through to consumers<\/span><\/b><span data-contrast=\"none\">.\u00a0In the event of increase in fuel prices, there is likelihood\u00a0that processors, transporters and even\u00a0farmers may\u00a0pass the increase in fuel costs to consumers.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559737&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">The final determinant is\u00a0<\/span><b><span data-contrast=\"none\">political<\/span><\/b><span data-contrast=\"none\">.\u00a0Governments decision on minimum support policy, procurement\u00a0of buffer\u00a0stocks of wheat and\u00a0paddy, regulation of\u00a0Sugar price will all impact Food inflation.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559737&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ol>\n<p><b><span data-contrast=\"none\">Source: <\/span><\/b><a href=\"https:\/\/indianexpress.com\/article\/explained\/explained-will-food-become-costlier-7378629\/\"><b><span data-contrast=\"none\">Indian Express<\/span><\/b><\/a><span data-ccp-props=\"{&quot;201341983&quot;:1,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:420}\">\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Relevance: Global prices of major agricultural commodities in India and the reason behind divergence in prices, way forward Synopsis:\u00a0\u00a0Factors affecting Food inflation in India. Background\u00a0 Brent Crude prices ($76.18) had reached the highest since October 2018. \u00a0 Since\u00a0the increase\u00a0in international oil\u00a0prices is\u00a0being fully passed on to Indian\u00a0consumers,\u00a0there is a concern that prices of Food will&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/explained-will-food-become-costlier\/\">Continue reading <span class=\"screen-reader-text\">Explained: Will food become costlier?<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[],"class_list":["post-115175","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704752806},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/115175","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=115175"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/115175\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=115175"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=115175"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=115175"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}