Food Inflation Bothers Nation

Food crisis and food inflation are what bothering Indian government now. As per stats from Financial Times and few other sources, vegetables presently cost 70% more than the last year. The recent decline in the food prices inflation from 18.3% to 16.9% (until 1st Jan), was not of much relief. Even after the slight decline in inflation, the vegetable prices have gone up by 3.84%, with only onion prices rising by 1.73%. The prices of individual food items such as egg, fish and meat were raised by 16.70%, milk price by 13.20% and prices of fruits by 17.71% annually. The items which showed decline in their prices are wheat (down by 14.84%), potatoes (decrease by 1.67%), and cereals (down by 0.12%) annually.

Besides onions, people would be suffering from crisis of milk products also in coming years. Milk products are the next major items whose prices are to be hiked. As per food inflation data (till the week ending with 1st January), the prices of milk products have already risen by 24% in the last year, with 18% hike in December alone. Even the latest hike in retail prices on December 19th was not able to bail out the producers from losses. This hike in milk prices is due to insufficient supply of fresh domestic milk, which is forcing the producers to import milk constituents, like skimmed milk. According to the latest data released by Government, dairy imports rose by 476% till October, in the last year. Not only insufficiency of domestic milk, but even the scarcity in availability of fodder is also a driving factor in price hike. According to the Economic Survey 2009-2010, there is 34% of green fodder shortage. As the cost of cattle feeds constitute to about 70% of milk production costs, it is very essential to cope up with this shortage to bring the prices down.

The non-food items whose prices were hiked are fibres (up by 36.71%) and minerals (up by 16.70%).

To check over rising food inflation, Finance Minister Pranab Mukherjee on 19 Jan, 2011 asked the states to remove local levies like octroi and mandi tax to bridge the gap between farmgate and retail prices.

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