But in the 12-month run up (May 2023-April 2024) to this year’s elections, retail food inflation has averaged 7.88 per cent.
Overall consumer price index (CPI) inflation averaged 4.39 per cent and CFPI inflation even lower at 3.38 per cent.
CFPI inflation ruled above CPI inflation in only 21 out of the 60 months from May 2014 to April 2019.
The Modi government has taken a host of measures to control food inflation in last couple of years.
But these measures haven’t really helped tame food inflation, which has remained elevated and probably contributed significantly to the NDA’s poll reverses this time — unlike in 2019.
If there’s one economic variable that could be held most responsible for the ruling Narendra Modi-led National Democratic Alliance’s (NDA) losses in the current national elections, it is food inflation.
Annual inflation based on the Consumer Food Price Index (CPFI) averaged a mere 0.03 per cent in the 12 months from May 2018 leading to the 2019 Lok Sabha polls. But in the 12-month run up (May 2023-April 2024) to this year’s elections, retail food inflation has averaged 7.88 per cent.
All the three basic foods – roti (cereals), dal (pulses) and sabzi (vegetables) – have registered double-digit inflation in the last 12 months, which would have definitely weighed on the ordinary voter’s mind. During this period, the average annual CFPI increase in cereals was 10.39 per cent, while 16.07 per cent for pulses and 18.33 per cent for vegetables.
Advertisement
In contrast, the May 2018-April 2019 period saw retail average just 1.98 per cent for roti, minus 7.24 per cent for dal and minus 4.80 per cent for sabzi.
A look at numbers during the two tenures of Prime Minister Narendra Modi. A look at numbers during the two tenures of Prime Minister Narendra Modi.
The Modi government’s entire first term (Modi 1.0) was, in fact, marked by benign inflation. Overall consumer price index (CPI) inflation averaged 4.39 per cent and CFPI inflation even lower at 3.38 per cent. CFPI inflation ruled above CPI inflation in only 21 out of the 60 months from May 2014 to April 2019.
It has been the opposite in the Modi government’s second term (Modi 2.0) from May 2019 to April 2024 (see charts). General CPI inflation has averaged 5.69 per cent, more than the Reserve Bank of India’s medium-term target of 4 per cent. The average retail food inflation has been even higher at 6.48 per cent. And CFPI inflation has exceeded CPI inflation in 30 out of 58 months (comparative data for the two Covid months of April and May 20202 isn’t available).
Advertisement
The low inflation during Modi 1.0 had primarily to do with international prices — not only of crude petroleum, but also agri-commodities.
The United Nations’ widely-tracked food price index crashed from an average of 119.1 points in 2013-14 to 90 points by 2015-16. The index – a weighted average of the world prices of a basket of food commodities over a base period value (taken at 100 for 2014-16) – was at 96.5 points even in 2019-20, before soaring thereafter to record levels of 133.2 points and 140.8 points in 2021-22 and 2022-23 respectively.
While global food prices have since eased — thanks to the end of disruptions from Covid and the Russia-Ukraine war — a patchy monsoon, courtesy of El Niño, has impacted domestic agricultural production. The Modi government has taken a host of measures to control food inflation in last couple of years. These include banning/restricting exports of wheat, non-basmati rice, sugar and onions, allowing imports of major pulses and edible oils at zero or 5 per cent duty, and imposing stocking limits in wheat and pulses for traders and retailers.
But these measures haven’t really helped tame food inflation, which has remained elevated and probably contributed significantly to the NDA’s poll reverses this time — unlike in 2019.
