Prohibitive price gains: On the Consumer Food Price Index

Rising food prices may affect already weak consumption of goods 

Inflation (a general, continuous increase in price) measured by the Consumer Price Index expectedly quickened to a four-month high in December, with the measure of gains in food prices accelerating (to happen or make something happen sooner or faster) at a relatively faster pace as inflation in cereals and pulses stayed stubbornly (in a way that shows you are determined to do what you want and refuse to do anything else) sticky. While headline retail inflation ticked up by 14 basis points from November’s level to 5.69%, price gains measured by the Consumer Food Price Index accelerated by 83 basis points from the preceding month’s reading to 9.53% in December. The upsurge in food prices was largely driven by cereals — the biggest constituent (one of the parts that a substance or combination is made of) of the ‘food and beverages’ group — that logged 9.93% inflation. Though that pace was marginally (by a very small amount) slower than the 10.3% posted in November, the key sub-group that includes the staples of rice, wheat and coarser cereals continued to register a month-on-month rate of inflation that offered little comfort to households. Disconcertingly (in a way that makes someone feel uncertain and uncomfortable or worried), sequential (following a particular order) price gains accelerated the most in the case of jowar and bajra — by 63 and 106 basis points, respectively, from November’s month-on-month inflation rates. These two coarse cereals are consumed more widely in the rural hinterland (a region in the middle part of a country, esp. a large country, that is far from cities or the coast), particularly by those already facing varying degrees of precarity (the state of being uncertain or likely to get worse). Price gains in pulses, a key protein source in vegetarian households, also accelerated to a 43-month high of 20.7%. With the current rabi season’s sowing of pulses as on January 12, almost 8% lower than in the corresponding (similar to, connected with, or caused by something else) period of 2023, the outlook for their prices in the coming months is far from reassuring (making you feel less worried).

Year-on-year inflation in vegetable prices also registered a dizzying almost 10 percentage points upsurge (a sudden and usually large increase in something) from November’s level, accelerating to a five-month high pace of 27.6%. Tomatoes and onions again led the charge, with their prices rising by over 33% and 74% from December 2022’s levels, respectively. However, reflecting (to show, express, or be a sign of something) the seasonal volatility (the quality or state of being likely to change suddenly, especially by becoming worse) that vegetable prices are prone to, prices of both the kitchen staples (basic or main; standard or regular), as well as the broader sub-group, witnessed (a person who sees an event happening, especially a crime or an accident) sequential deflation (a reduction of the supply of money in an economy, and therefore a reduction of economic activity, that is often part of an intentional government plan to reduce prices). While the month-on-month deflation in overall vegetable prices was 5.3%, the prices of potatoes, onions and tomatoes contracted from November by 5.9%, 16% and 9.4%, respectively. Still, the average retail price of a majority of the 23 food items monitored on a daily basis by the Department of Consumer Affairs continues to remain higher as on January 14 than the year-earlier level, reflecting the challenge policymakers (a member of a government department, legislature, or other organization who is responsible for making new rules, laws, etc) face in containing food-price inflation. With households likely to spend larger shares of their incomes on food as these costs continue to rise, there is a real risk that the knock-on impact on already weak consumption can derail (to prevent a plan or process from succeeding) the broader growth momentum (the quality that keeps an event developing or making progress after it has started) in the economy. And with the spiralling (if costs, prices, etc. spiral, they increase faster and faster) crisis in West Asia infusing (to cause someone or something to take in and be filled with a quality or a condition of mind) a new level of uncertainty over global trade and energy costs, policymakers have their task cut out.

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