The Economic Survey 2024-25 observed that food prices remained elevated in the current fiscal year, even as overall inflation declined. The document noted that retail headline inflation eased from 5.4 per cent in the 2023-24 fiscal year (FY24) to 4.9 per cent in the 2024-25 fiscal year (FY25) so far. This inflation is measured by the change in the Consumer Price Index (CPI).
The fall in the metric was credited to a 0.9 percentage drop in the core inflation (non-food, nonfuel) between the FY24 and April-December 2024 period. Globally, however, food inflation remained on a downward trend as improvement in supply conditions and helpful growing environment resulted in food prices easing. However, emerging economies like China, India, and Brazil reported a contrasting pattern.
Inflationary pressures across the world have been easing though risks of synchronised price pressures remain due to possible geopolitical disruptions like tensions in the Middle East and the ongoing conflict of Russia and Ukraine. “Central banks have adopted more accommodative monetary policies. However, the pace of rate cuts varies across regions depending on the growth imperatives and the pace of disinflation, creating potential divergences in economic recovery,” the survey said.
Food Inflation On The Rise
The food inflation in India climbed from 7.5 per cent in FY24 to 8.4 per cent in FY25 (April-December) so far. This surge was driven by some food items like vegetables and pulses. The food inflation is measured by the Consumer Food Price Index (CFPI). The pressure in food prices was driven by some factors like disruptions in the supply chain and unpredictable weather conditions.
While vegetables and pulses hold an overall weightage of 8.42 per cent in the CPI basket, their contribution to the overall inflation remained at 32.3 per cent in FY25 so far, the survey found. In comparison to food grains, vegetables remained more susceptible to extreme weather events like cyclones, thunderstorms, droughts, and heavy rains.
Going ahead, the survey said that food inflation is expected to ease a bit in the January-March quarter in the current fiscal year with vegetable prices easing and arrivals of the Kharif harvest. The major risks to food inflation include a jump in global agricultural commodity prices and adverse weather events. “Global energy and commodity prices have softened in the recent past, making the core inflation outlook benign. However, risks remain on account of significant global political and economic uncertainties,” the survey stated.
Also Read : Economic Survey 2024-25: India’s GDP Likely To Grow At 6.3-6.8 Per Cent In FY26
