SITTING DUCK

Food inflation is at an unprecedented high across the world. Crop loss due to extreme weather events is behind the spiralling prices. The cycle can be interrupted only if farmers have access to robust weather forecast mechanisms and crop insurance schemes

- AN ANALYSIS BY RICHARD MAHAPATRA AND SHAGUN KAPIL IN DELHI WITH PRIYA RANJAN SAHU IN ODISHA, RAKESH KUMAR MALVIYA IN MADHYA PRADESH, ANAND DUTT IN JHARKHAND, SHUCHITA JHA IN RAJASTHAN, M RAGHURAM IN KARNATAKA, MOHD IMRAN KHAN IN BIHAR AND  PURUSHOTTAM THAKUR IN CHHATTISGARH 

AT 14. 23 per cent, India’s wholesale inflation rate in November 2021 was the highest in three decades. It did reduce marginally to 13.56 per cent the next month, as per data released on January 14, 2022, but even this number is bad news for the government given that five states, including the politically significant Uttar Pradesh, are about to vote in the coming months. Wholesale price index (WPI) inflation is always a cause of concern since it can lead to a higher retail inflation. What’s worse, the price rise has been continuous, with December 2021 being the ninth consecutive month to see WPI rise in double digits. Experts predict that the situation would remain the same till the end of the financial year in March.

The high December inflation rate was unexpected because the government had reduced taxes on fuels—a major add-on to overall inflation. So, why is the inflation so high? As it emerges, food inflation, particularly the rise in prices of vegetables and a few foodgrains, has been a driver of this episode of overall inflation. India’s wholesale price inflation peaked in November 2021 due to a surge in primary food inflation that hit a 13-month high. In many states, prices of seasonal vegetables are seeing an unprecedented rise. The answer to this is crop loss due to extreme weather events, and the trend is not limited to India.