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Resource centre on India's rural distress
 
 

Climate and food price rise: Extreme weather events triggering unprecedented food inflation -Richard Mahapatra

-Down to Earth

Unfavourable, unreliable weather hurt agriculture, in turn pushing food prices our of reach across the world

At 14.23 per cent, India’s wholesale inflation rate in November 2021 was the highest in three decades. It did reduce marginally to 13.56 per cent the next month, according to government data released January 14, 2022. But even that is bad news for the Centre ahead of Assembly elections in five states, including politically significant Uttar Pradesh.

Wholesale price index (WPI) inflation is always a cause of concern as it can raise retail inflation. What’s worse, the price rise has been continuous — December 2021 was the ninth straight month of double-digit percentage increases in the WPI. Experts predict the situation to remain the same through the end of this financial year (March 30, 2022).

High December inflation was unexpected: The government had reduced taxes on fuels — a major add-on to overall inflation. So, why does inflation remain high?

As it emerges, food inflation — particularly the rise in prices of vegetables and a few grains — has been a driver of this episode of overall inflation. India’s wholesale price inflation peaked in November 2021 due to a surge in primary food inflation that hit a 13-month high.

Prices of seasonal vegetables jumped unprecedentedly in many states. And this was due to extreme weather events; and this trend is not limited to India.

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