Why food inflation outlasts the monsoon

Sample articleIllustrative text, not published research

When food prices rise, the monsoon usually takes the blame. A weak or late season does cut harvests, and prices follow. But prices often stay high long after the rains recover, and the reasons sit further along the chain: in storage, transport and the rules of trade.

What the index measures

India tracks food prices through the Consumer Food Price Index, released each month with the Consumer Price Index by the National Statistics Office. Vegetables, pulses and edible oils swing the most. Cereals move more slowly, partly because the government holds large buffer stocks of rice and wheat and can release them to cool the market.

“A good monsoon fills the fields. It does not fill the warehouses, the trucks or the import quota.”

Storage and transport

Tomatoes and onions spoil quickly, and cold storage is thin outside a few states. A shortage in one region cannot easily be met from another, so local prices jump. Pulses keep well but are partly imported, so a change in import rules, or a poor harvest in a supplying country, reaches Indian shops within weeks.

Trade rules

Export bans, stock limits under the Essential Commodities Act and changes to import duty are all used to manage prices. Each can help in the short run. Used often, they leave traders and farmers unsure of what next season will bring, and that uncertainty has a cost of its own.

This brief lists which levers were pulled in each recent price spike, and what happened next.