Food inflation refers to a sustained rise in the prices of food items such as cereals, pulses, vegetables, fruits, milk, eggs, and edible oils
- Weather and Climate Shocks: Erratic monsoon, droughts, floods, heatwaves and unseasonal rainfall reduce agricultural output and disrupt supply.
- Supply–Demand Mismatch: Rising population, urbanisation and incomes increase demand, particularly for milk, eggs, fruits, vegetables and protein-rich foods, while supply may adjust slowly.
- Low Agricultural Productivity: Small and fragmented landholdings, inadequate irrigation, limited mechanisation and productivity gaps constrain food supply.
- High Input Costs: Increase in prices of fertilisers, diesel, electricity, seeds, fodder and agricultural labour raises the cost of production.
- Supply-Chain Bottlenecks: Poor storage, inadequate cold-chain facilities, transport disruptions and high logistics costs increase farm-to-retail prices.
- Perishability and Post-Harvest Losses: Fruits and vegetables have short shelf lives; inadequate processing and storage can cause significant wastage and sharp seasonal price fluctuations.
- Global Commodity Prices: India remains exposed to international prices of commodities such as edible oils and pulses. Global supply disruptions and geopolitical tensions can therefore transmit inflation domestically.
- Fuel Price Increase: Higher fuel costs increase the cost of agricultural operations, processing, and transportation, indirectly raising food prices.
- Market Imperfections: Multiple intermediaries, inadequate market integration, hoarding, and speculative activities can widen the gap between farm-gate and retail prices.
- Structural Changes in Consumption: Dietary diversification from cereals towards protein-rich and high-value foods can create persistent demand pressures when domestic supply does not expand correspondingly.
- Government Policies: Changes in MSP, procurement, buffer-stock operations, import duties and export restrictions can influence domestic availability and prices.
- Seasonal Factors: Vegetables such as onion, tomato, and potato frequently experience temporary supply shortages between crop cycles, producing sharp price spikes.
Source: The Indian Express