Food inflation falls to lowest level since 1991 -Surojit Gupta
-The Times of India
Average food prices in 2018-19 were almost the same as they were in 2017-18—a phenomenon not seen for at least 27 years. An analysis by credit rating agency Crisil shows food inflation measured by the consumer price index rose only 0.1% in 2018-19. The last time annual food inflation had fallen below 1% was in 1999-2000.
Economists attribute low food prices to a string of factors including bumper crop, low demand, low global prices, and muted impact of increased minimum support prices (MSP).
Low and stable food prices are good for everybody except farmers, unless it is accompanied by increase in productivity.
“I would attribute it to two factors—above the trend growth in farm produce in the last 3-4 years, and favourable global food prices,” says DK Joshi, chief economist with Crisil.
According to Joshi, impact of increase in minimum support prices has been muted so far, mainly due to low market prices for most crops. “But going forward food inflation will move up and a lot will depend on the status of monsoon,” he said.
Food inflation has been falling consistently since 2013-14, which was the last year prices had risen by more than 10% annually. Some economists say the country may have graduated permanently to a low food inflation economy.
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