ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Food InflationSubscribe to Food Inflation

Tackling Food Inflation

Retail inflation, measured by the year-on-year consumer price index, reached 6.83% in August 2023, higher than the Reserve Bank of India’s upper tolerance limit of 6%. This surge was driven by soaring food prices. The government has implemented a series of measures, including an export ban on non-basmati white rice, export ban and stocking limits on wheat, a 20% export duty on parboiled rice, a minimum export price of $1,200 per tonne on basmati rice, etc, to contain food inflation. However, these abrupt and stringent market-depressing measures are impacting farmers’ income adversely. A more rational and dependable trade policy that balances the interests of producers and consumers while containing food inflation is advocated.

How Effective Is e-NAM in Integrating Food Commodity Prices in India?

The e-National Agriculture Market is a pan-India electronic trading portal which integrates the existing Agricultural Produce Marketing Committee mandis to create a unified national market for agricultural commodities. Aganist this backdrop, this paper examines whether the introduction of e-NAM by the government has improved the spatial integration of onion markets in India. Using the maximum likelihood method of co-integration, it investigates onion market price integration of Maharashtra, Karnataka, Rajasthan, and West Bengal with the average wholesale onion price of India for 2010ñ16 (before e-NAM) and 2016ñ19 (after e-NAM). It provides evidence in favour of market integration for 2016ñ19, while multiple relations are found to govern onion prices across states during 2010ñ16. The evidence in effect suggests that introduction of e-NAM in 2016 has improved market integration for onion market prices in India.

Extreme Weather Events and Vegetable Inflation in India

Extreme weather events like cyclones, heavy rainfall/floods, thunderstorms, hailstorms, and droughts often damage standing crops, causing supply shortages and spikes in vegetable prices in India. Such supply shocks push up food inflation and also increase food price volatility. This paper analyses the impact of such extreme weather events on the prices of three key vegetables, that is, tomatoes, onions and potatoes in India. It also tries to find out whether the inclusion of these weather events improves out-of-sample forecast performances. The paper concludes that these events have a significant impact on the prices of TOP and aids in forecast performance in the case of onions and potatoes. Therefore, monitoring the occurrence of such extreme weather events in important TOP-producing states can help in predicting future surges in prices of these vegetables and improve forecasting performance of food inflation in the short term.

Understanding Inflation Dynamics in India

The flexible inflation targeting framework was formally adopted by India in 2016 with an amendment to the Reserve Bank of India Act. This paper attempts to throw light on the dynamics of consumer price index headline, core, and food inflation, using a relatively young and atheoretical approach pioneered by Stock and Watson in 2007. The empirical results, indicating that the behaviour of core inflation is different from that of headline and food inflation, have implications for the conduct of monetary policy.

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