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In 2024-25, food inflation remained stubbornly high at 7.3 per Among the food sub-groups, vegetables have been the largest Notably, vegetables have also exhibited the highest volatility,
CONTRIBUTION OF FOOD INFLATION TO cent even though it was marginally lower than the 7.5 per cent contributor to food inflation. Over the last three fiscal years with a standard deviation of 16.9, far exceeding the 2.6
THE HEADLINE PRINT HAS MORE THAN in the previous fiscal year. The stickiness in food inflation has (FY22-FY25), vegetable inflation has averaged 8.3 per cent, standard deviation for overall food inflation.
DOUBLED IN THE RECENT YEARS kept headline inflation at 4.6 per cent, even as core inflation much higher than the overall food inflation of 6.3 per cent.
moderated sharply to 3.5 per cent from 4.3 per cent in the
previous year. Historically as well, food inflation has not only
Rising food prices not only erode households’ purchasing been higher, but a volatile component of headline inflation
power and worsen economic inequality but also undermine compared to core inflation. Over the last decade (FY16-FY25), Figure 3: Inflation mean and standard deviation of CPI food sub-groups
broader economic stability by dampening overall consumption. food inflation averaged 5.1 per cent, outpacing headline
Addressing food inflation is, therefore, not only essential for inflation at 5.0 per cent and core inflation at 4.9 per cent. The 20.0
maintaining price stability but also crucial for ensuring food volatility of food inflation, measured by standard deviation of
security and fostering sustainable economic growth. 3.6, significantly exceeded that of headline inflation (1.4) and 16.0
core inflation (0.9). 12.0
8.0

4.0
Figure 1: Headline, core and food inflation (y-o-y%)
20.0
0.0
Food Price Cereals and Products Meat and Fish Vegetables Pulses and Products Sugar and Confectionary Prepared Meals
CPI Egg
15.0 Index Fruits Spices

10.0
Avg Inflation % (FY22-FY25) Inflation S.D.(FY22-FY25)
5.0 Source: MoSPI, CII Research

0.0
Apr-12 Mar-13 Feb-14 Jan-15 Dec-15 Nov-16 Oct-17 Sep-18 Aug-19 Jul-20 Jun-21 May-22 Apr-23 Mar-24 Feb-25 'TOP' (TOMATO, ONION, POTATO) A deeper dive into vegetable price trends reveals that certain
commodities have been particularly prone to inflationary
-5.0 COMMODITIES EXERT A LARGER spikes and volatility. Garlic has recorded the highest average
CPI Core Index Food Price Index INFLUENCE ON OVERALL INFLATION DUE inflation and volatility in the last three fiscal years. Tomato and
Source: MoSPI TO THEIR HIGH VOLATILITY AND Ginger have also experienced high inflation and sharp price
SUBSTANTIAL WEIGHT IN CPI BASKET fluctuations, followed by Potato and Onion.

In recent years, there has been an increasing influence of food the pre-covid average (FY16-FY20) of 30.6 per cent. In
inflation on the overall inflation dynamics. The relative contrast, core inflation’s contribution to headline inflation has
contribution of food inflation to headline inflation has more moderated from a pre-covid average of 55.2 per cent to 36.1 Figure 4: Inflation mean and volatility among vegetables
than doubled since 2021-22, increasing from 26.9 per cent in per cent in 2024-25.
2021-22 to 61.7 per cent in 2024-25. This is much higher than
80.0
Figure 2: Relative contribution to headline inflation (%) 70.0 Garlic
70.0
61.7 60.0 Tomato
60.0 55.2 54.5 Ginger
51.3 50.0
50.0
43.0
38.9 38.3 40.0
40.0 36.1 Inflation volatility (FY22-25) (measured by s.d.) Potato
30.6 Onion
30.0 26.9 30.0 Cabbage
Cauliflower
20.0 20.0 Brinjal Peas Carrot Lemon
10.0 10.0 Beans Radish
Palak
0.0 0.0
Avg 2021-22 2022-23 2023-24 2024-25
(2015-20) 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0
Core Inflation Food Inflation
Average Inflation (FY22-FY25)
Note: The relative contribution of food and core inflation to headline inflation is determined by their respective weights in CPI. Core CPI has a weight of 47.3 per cent, and the food price index has a
weight at 39.06 per cent in CPI. The remaining share is attributed to non-alcoholic beverages, prepared meals and snacks, and fuel and light.
Source: MoSPI, CII Research
Source: MoSPI, CII Research

20 QUARTERLY JOURNAL OF ECONOMICS QUARTERLY JOURNAL OF ECONOMICS 21
APRIL 2025
APRIL 2025