SOIL Report 2011 - ACCESS Development Services

42 State of India’s Livelihoods Report 2011Box 2.5: Food inflation: Greater impact on the poorA recent study in India, examined the impactof food inflation from 2005–07 across thehigh, medium and low categories of households.In 2006–07, while higher incomehouseholds experienced food inflation at4 per cent, the lower income householdexperienced it at 11.5 per cent. This periodcoincided with the times when the prices ofessential items of the food basket (comprisingof cereals, breads, oil and fat, and condimentsand spices) increased at a faster rate thanthe price of discretionary food items (suchas pulse, meat, fish, and egg; milk and milkproducts; fruits and vegetables). The foodinflation impact was experienced the mostby the lower income households.Source: Munjal (2010).46.2 per cent in CPI. Second, in times ofhigher food prices, the poor pay a higherprice per unit of cost for a food item becausethey tend to buy even smaller quantities offood spread over a longer purchase periodthan at other times.The percentage of contribution of fooditems to the overall inflation has variedover FY 2009–10 and FY 2010–11 (seeFigure 2.18). Food inflation was the largestcomponent of inflation for the entire FY2009–10. Although the proportion of foodinflation in total inflation decreased over2010–11, it continued to remain high. It isonly since February 2011 that food inflationhas moderated. In March 2011 food inflationhad decreased to 8.28 per cent, but thisdecrease was hardly reflected in reducedprices at the retail level. Food inflation isestimated to have pushed a great numberof persons into poverty.Figure 2.18: Contribution to overall inflation: Major groupsSource: Reserve Bank of India (2011, p. 17, Chart II.27 and p. 31, Chart II.22).