07-Inflation

In the present 21 st Century, the global persisting problem has been the raising prices of food articles word over, affecting the general masses especially middle class people world wide who is the real drivers of global economy. Such trends have pushed 44 million people into poverty world over and bigger chunk belongs to Africa, Asia and Latin American continents. Hence, it has become imperative for the Governments of both developed and developing nations to tackle such trends on war footing. Otherwise, poverty at global level would rise enormously and there could be deceleration of growth and development in the world economy. The present paper tries to analyze trends and causes of such persisting trends and suggests suitable measures to meet the rising and vital challenge of 21 st Century. INTRODUCTION Food articles are the necessity of life and hence, have direct impact, consequences and implications on human life, purchasing power and standard of living of the people. Any rising trend in prices of these commodities creates hue and cry. The people demand effective measures from the Governments to bring down the prices so that the existing pressure on the people could be eased out.

Global food prices registered a new high in February 2011, rising by more than 30% year-on-year, underpinned by large increases in the prices of cereals, edible oils, and meat. While the recent price increases were triggered largely by production shortfalls due to bad weather, structural and cyclical factors that were at play during the 2007–2008 food crisis continue to be relevant, especially in light of the strong recovery of many emerging economies from the global economic crisis. In the short term, a continuing trend of high and volatile food prices is likely. This is because grain carryover stocks have been falling as production has been unable to meet utilization requirements. In addition, supply uncertainties are rising due to extreme weather disturbances. Hikes in the international prices of rice and wheat—the two key staples produced and consumed in developing Asia—together with increases in other domestic food items, have translated to an average domestic food price inflat...

2008

The rapid rise of cereal and other food prices in the current phase have provoked deep concern regarding food security in developing countries. Whilst a vast majority of people in developing countries are already suffering from widespread malnutrition, the rapid rise of prices of food items is likely to make these people more vulnerable. Most of the poor are net buyers of food items, and the impact of food price shocks on their livelihood are pronounced. Using Bangladesh as a case study of developing countries, this paper describes how soaring inflation has affected food security, it elicits the causes of the crisis, details the government responses, and summarises the lessons learned with regard to monetary policy and food security measures.

2010

IDS Bulletin, 2013

Although nutrition has been framed as a predominantly health sector concern in Pakistan, food security, defined as the condition 'when all people, at all times, have physical and economic access to sufficient, safe, and nutritious food, and to meet their dietary needs and food preference for an active and healthy life' (FAO 1996), will remain an important component of any overarching nutrition policy. Like most countries with relatively open economies, Pakistan experienced food security challenges due to food price inflation and volatility in 2007 and 2008. The broad trends in prices were in line with conditions in global markets and other comparable countries. National policies, however, were thought to have contributed to specific price spikes and temporary but acute shortages in local markets, leading to heightened concerns about hunger and malnutrition.

2009

Food inflation from last few years has been a great deal of interest in India. High food inflation since 2006 has become one of the most confronting challenges for the policy makers especially when it was running with double digit. Given that an average household in India still spends almost half of its expenditure on food, and poor around 60 percent (NSSO, 2011), and that poor cannot easily hedge against inflation, high food inflation inflicts a strong 'hidden tax' on the poor. So the correct diagnosis about the nature, structure and factors influencing food inflation, therefore is critical for any rational policy decision. In this back drop the study will make an attempt to analyse the nature and structure of food inflation. Also the study will analyse major determinants of food inflation by using the monthly data from January 2006 to December 2013. The paper analyses that there has been a compositional shift in determining the commodities of food inflation. The major role in escalating the food inflation in recent years is due to the commodities with high protein concentration and highly nutritious. The higher demand followed by the increase in the input costs of agricultural commodities and increase in the income has resulted in the high food inflation. However the period of study has followed a favourable supply especially of the high demanding commodities. The papers end up with some concluding remarks. Introduction Last decade witnessed a rapid and substantial rise in the food prices, which posed a complex, challenges for the policy makers at the international level in general and in India in particular. In recent year's food prices, especially after 2005, food prices increased much faster rate than the non-food prices, except in 2008 when global prices of commodities spiked in India and in global markets. Indian economy experienced one of the highest rates of food inflation 1 among the emerging economies at an average of more than 9% during the period 2006 to 2013(working paper). This acceleration of food inflation in India is since 2005 has and it was close to 20% in January 2010. Annual average food inflation during the period 2006 to 2009 was more than 80% higher than inflation in non-food commodities (Ramesh Chand, 2010).Food price inflation is one of the most critical economic problems in the country today, and the ability to control prices of food articles quickly and effectively is one of the main bases on which people will judge the performance of this Government. It is because of the fact, that in India, an average house hold still spends almost half of its expenditure on food, and poor around 60 per cent (NSSO, 2011).Given that this section of population already spends a large proportion of their income on food and that poor cannot easily hedge against inflation, implies this high food inflation inflicts a strong 'hidden tax' on the poor (Gulati Sawita, 2013). There have been money studies, which have raised the issue of food inflation and the factors responsible, both at national as well as at international level. Mitchell (2008) argues that biofuel production from grains and oil seeds in US and EU accounted for as much as two thirds of the price increase in theses commodities between 2002 and 2008. Gilbert (2010) finds little evidence that price spike during this period was driven by heightened demand for grains and oilseeds as biofuel feed stock. Another aspect of the food inflation revealed from the literature is the surge in demand for grains in the emerging economies such as India and China. Krugman (2008) pointed out that the rise in per-capita income in several emerging

Food inflation hurts poor more than rich as poor spend higher proportion of their income on food items as compared to rich. Higher global food and crude oil prices in 2008 resulted in higher (than historical average) food inflation in Pakistan. Global food inflation caused food inflation in Pakistan. However, food inflation diffusion has been lower as compared to non-food inflation in Pakistan. Food inflation volatility in Pakistan was found to be half of that observed in the world. Compared to global food inflation persistence, there is no evidence of food inflation persistence in Pakistan. However, within the food group, most of the goods, which were manufactured, exhibited inflation persistence. With the help of comparison of food inflation with wage increases for labour (after 2008 global commodity prices shock), the poor (labour class) was found to be at disadvantage.

2008