New Delhi: High food
inflation, which has reached 12 percent, continues to baffle
economists and policymakers alike. But is it really due to a
change in the food habits of people -- a demand for more
vegetables, eggs and milk, as both the prime minister and finance
minister have said -- or lower supply of consumables? The
government is still groping for an answer to give to the people.
Prime Minister Manmohan Singh, at a press conference in Cannes
last week, said inflation in prices of vegetables, milk and eggs
was due to prosperity and a changing food basket. Finance Minister
Pranab Mukherjee said in Mumbai Monday: "The principal reason (for
the price rise) is that the demand for eggs, meat, vegetables and
milk has increased."
Planning Commission member Abhijit Sen, giving reasons behind a
change in people's food habits, said the inflation is driven
partly by an increase in per capita income and partly by a change
in people's taste. However, he said it was difficult to say
whether inflation in vegetables, milk and eggs was driven by
higher demand or lower supply of the consumables.
"We don't have enough data to justify this trend 100 percent. Data
on food output is poor," Sen told IANS. "High food inflation
surprises us all. We need better data on food output," Sen said.
Food Minister K.V. Thomas, in similar views expressed earlier,
said that the production of milk, meat, poultry and vegetables
needs to be increased as their changing consumption pattern over
the past few years was contributing to food inflation.
"Consumption pattern of milk, meat and poultry and vegetables is
changing as compared to previous years," Thomas had told IANS.
The food inflation data shows that the price of foodgrains has
remained largely unchanged, while that of vegetables, milk, eggs,
meat and fruits has risen substantially. This reflects that while
foodgrains remain a staple of the people, they are consuming more
of vegetables, milk, eggs and meat.
Sen, Planning Commission member in charge of food and agriculture
issues, said there is a change in people's food habits, but the
National Sample Survey Organisation 2009 data indicates there is
not much difference in the rate at which people's food habits have
changed over the past decade.
"There is a change in people's food habits, but it is slow," he
Sen said he is surprised that good monsoon in the past two years
has failed to moderate high food prices.
Battling to curb high prices of essential commodities, which have
hit the common man hard, the government has been arguing that
while "there was no inflation in foodgrains, rising prices of
vegetables, milk and eggs were contributing to food inflation".
Experts are concerned that high food inflation could spill over to
other sectors of the economy and affect the growth targets set by
Sen said inflation is expected to come under control by next
However, agriculture expert Devinder Sharma blamed the
government's policies for high food inflation. "They need to
improve food management," he said.
The government has also said that increased minimum support price
(MSP) for foodgrains has also added to food inflation. Thomas said
the government needs to provide better prices to the farmers and
hence has to increase the MSP.
The government buys wheat and rice from the farmers at announced
MSP and distributes it among eligible beneficiaries through the
public distribution system.
In the week ended Oct 22 inflation registered a sharp rise at
12.21 percent -- the highest in nine months. Prices of pulses,
vegetables and milk and poultry all rose. The week before had seen
food inflation logging at 11.43 percent.
According to the latest data on food inflation, vegetables rose
28.89 percent, fruits: 11.63 percent, potatoes: 0.98 percent,
eggs, meat, fish: 13.36 percent, cereals: 4.13 percent, rice: 4.21
percent, wheat: (-) 1.54 percent, pulses: 11.65 percent - compared
to last year.
(Amit Agnihotri can be contacted at email@example.com)