Food inflation has been a very big contributor to inflation in the recent years so much so that people have considered getting rid of certain food items altogether to avoid burning holes in their pockets.
The situation, however, is likely to get better around Q4FY25 with the seasonal easing of vegetable prices and the arrival of Kharif harvest, according to the Economic Survey tabled in the Parliament today. Union Finance Minister Nirmala Sitharaman tabled the document in both the houses of the Parliament — Lok Sabha and Rajya Sabha — today.
If rabi production is good enough, then, the food prices are likely to be contained in the first half of 2026.
“Adverse weather events and rise in international agricultural commodity prices, however, pose risks to food inflation. 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 document read.
Globally, food inflation is on a downward trend on account of improving supply conditions given strong harvests and favorable crop growing conditions.
But why has India not been able to contain food inflation? In India, however, the food inflation rate has remained firm due to supply chain disruptions worsened by extreme weather conditions and reduced harvest of some food items such as vegetables and pulses.Â
Vegetables and pulses together account for a weightage of 8.42 per cent in the CPI basket whereas their contribution to the overall inflation was at 32.3 per cent in FY25, as per the Economic Survey.
The document also noted that upon the exclusion of the two items, the country’s average food inflation rate for FY25 was 4.3 per cent, over 4 per cent lesser than the overall food inflation.Â
The Economic Survey, prepared under the supervision of Chief Economic Advisor V Anantha Nageswaran, also stated that the surge in tomato and onion prices caused by weather-related supply disruptions led to higher inflation rates in FY25.Â
“When we exclude the three most price-sensitive vegetables (tomato, onion and potato (TOP)) from the CPI basket, the average food inflation rate in FY25 (April-December) was 6.5 per cent, which is 1.9 per cent lower than the current food inflation. Similarly, average headline inflation is 4.2 per cent when excluding TOP, which is 0.7 per cent lower than the current headline inflation.”