Food inflation rears its ugly head again

After nearly a month’s respite, the food inflation rate breached on the double-digit mark for the week ended on December 11 when onion prices were just beginning to shoot up sharply.

As per the latest data released by the government on Thursday, the rate of food inflation zoomed to 12.13 per cent for the week ended on December 11, a sharp rise of 2.67 per cent points over the 9.46 per cent figure for the previous week. With onion prices skyrocketing over the last 10 days, there is reason to fear the worst that the rate of food inflation could go up further.  

A quick analysis of data revealed that the alarming spurt in food inflation is primarily prompted by the continuing rise in prices of onion and other key vegetables coupled with other food items like milk, eggs, meat and fish. Apprehensions in government circles that the continued spurt in the prices of these items of basic costs of living for the common man could lead to an alarmingly higher food inflation, the kind of which was witnessed a year ago when prices of cereals, pulses and sugar were very high.

There were suggestions during the day that the Manmohan Singh government, already worried over likely adverse political implications of the high onion prices, had deferred a move a couple of days ago to consider a hike in the administered price of diesel and cooking gas. An Empowered Group of Ministers (EGoM) under Union Finance Minister Pranab Mukherjee had deferred a scheduled meeting on this earlier this week.

Indications are that the government will seek to moderate food inflation, including on the onion front, before considering diesel and cooking gas price hike in view of the cascading impact of such a move on food inflation.

Pranab Mukherjee on Thursday attributed the high onion prices as one of the reasons for the raging food inflation. “There has been some upward movement of food items… One of the reasons may be the high prices of onion. It is also contributed by some of the other food items-- edible oil, milk, fruits and vegetables,” he said.

Onion prices have risen up to Rs 70-80 per kg in retail markets across the country from just

Rs 35-40 a few days ago. Other key vegetables like tomato and garlic, which are commonly used by households, are also witnessing a sharp upswing.

The rising food inflation prompted Cabinet Secretary K M Chandrashekar to convene a meeting of the secretaries of the concerned ministries during the day. Referring in particular to the high onion prices, he said after the meeting: “The government is expecting improvement in the situation on onion prices quickly as the wholesale prices have started coming down.” The commerce ministry was scouting for overseas sources to import onion, he added.  However, Commerce Secretary Rahul Kullar said there was no immediate move to import more onions from Pakistan. The reason being that the government expects the prices to moderate over the next few days. Besides onions, the government is also anxiously watching the prices of other vegetables like brinjal, cauliflower, garlic and bitter gourd which have gone up suddenly.

According to National Horticulture Board data, in Bangalore, prices of tomato and cauliflower have gone up by more than 82 per cent this month over last month's levels, while brinjal prices have gone up by 44 per cent in the same period.