3 Shifting contours of food inflation

Food items have a share of 39% in the overall CPI basket. CMIE data shows that headline food inflation has come down from 8.6% in September to 7% in October. This headline number however, hides varying trends in prices of various food items. For example, inflation in the oil and fat category shows a 2.15% contraction in prices on an annual basis. This sub-category, which includes edible oil, was a major driver of food inflation with annual inflation staying in double digits for 26 consecutive months between April 2020 and May this year. The latest disinflation trend shows that prices have actually started coming down rather than there being a moderation in price growth. Prices of cereals, on the other hand, seem to be gathering momentum. CMIE data shows that inflation for the cereals and products category has increased from 5% in March to 12.1% in October. Among other important food items, inflation has increased for milk and milk products and meat, egg and fish while it has come down for vegetables and pulses.