Food Inflation In India Still Rising: What’s Causing the Surge? Economic Survey 2024-25 Explains

The Economic Survey 2024-25 has highlighted that food prices in India have remained high, even though overall inflation has come down. Retail inflation, which was 5.4% in the last financial year (FY24), has dropped to 4.9% so far in FY25 (April-December). This decline was mainly due to a drop in prices of non-food and non-fuel items.

Why Are Food Prices Still High?

While food prices have eased in many countries due to better supply and good weather, India, along with China and Brazil, has seen the opposite trend. In India, food inflation has increased from 7.5% in FY24 to 8.4% in FY25 so far. This rise is mainly due to expensive vegetables and pulses, caused by supply disruptions and unpredictable weather.

Vegetables and pulses make up about 8.42% of the Consumer Price Index (CPI) but contributed 32.3% to overall inflation this year. The survey pointed out that vegetables are more affected by extreme weather events like cyclones, droughts, and heavy rainfall compared to food grains.

What's Next for Food Prices?

The survey predicts that food prices may ease slightly in the coming months as vegetable prices come down and new Kharif crops arrive in the market. However, there are still risks, including rising global agricultural prices and unexpected weather changes.

Even though global energy and commodity prices have fallen recently, political and economic uncertainties could still impact inflation in the future.