Food inflation dip may not last for long
The recent vanishing act of food inflation may be a temporary phenomenon as certain structural problems in the agriculture sector, deceleration of sowing for Rabi crop and diminishing base effect may push up food prices again, before the onset of summer.
Experts said the developments in the farm economy are indicative of a re-emergence of food inflation and urged the government to take a re-look at raising farm productivity and strengthening agro-infrastructure.
In recent weeks, food inflation eased mainly due to a sharp fall in vegetable and wheat prices, but latest data show a decline in Rabi sowing by around 1.5 per cent in 568 lakh hectares as compared to 577 lakh hectares sown in the corresponding period last year.
The cumulative rainfall in the last quarter of 2011 was also deficient by 48 per cent.
Also, prices of most protein-rich items have been hovering in double digits. For example, inflation in respect of egg, meat and fish stands close to 20 per cent, followed by pulses at above 14 per cent, milk at 11.48 per cent and fruits at over 10 per cent for the week ended January 7.
“An important feature of several of these commodities is their short shelf life and price sensitivity due to demand and supply fluctuations,” India’s Chief Statistician T C A Anant told Deccan Herald.
He said it was important to strengthen farm infrastructure, especially connectivity between big cities and rural areas. “Only then can the perishable items reach the high demand centres without much wastage,” Anant said.
Sandip Somany, President of PHD Chamber also suggested enhancing public investments in agriculture infrastructure which includes linkages from farm gate to markets, warehouses, cold storages and cold chains for the better management of farm produce.
The other factors stoking food inflation are diminishing favourable base effect, which is expected to disappear by February this year. Food prices in February last year were very high and vegetable prices, which generally soften in winter, had not come down during the same month last year.
