The recent rise in food inflation, particularly affecting vegetables and pulses, has become a significant economic concern for Indian households. According to the latest Economic Survey 2024-25, climate change-induced weather extremes, including relentless heatwaves and unpredictable rainfall patterns, have dramatically impacted agricultural production, causing sharp spikes in food prices.
India's food inflation rate has remained firm at 8.8 percent—marking a stark divergence from global trends of stability or decline. The Economic Survey, presented by Union Finance Minister Nirmala Sitharaman on January 31, 2025, highlights how extreme weather conditions have disproportionately burdened food prices during the past two years. With food items constituting about two-fifths of the consumer price index (CPI) in India, the Consumer Food Price Index (CFPI) emerges as a pivotal determinant of overall retail inflation.
Climate-related events such as prolonged heatwaves and erratic rainfall have wreaked havoc on agricultural production, leading to hefty price hikes of key vegetables. For example, tomatoes and onions have been flagged as central contributors to inflationary pressures. The price increase of tomatoes and onions has particularly been felt across key producing states like Maharashtra, Karnataka, and Andhra Pradesh. Recent data has shown retail prices of tomatoes spiking dramatically as mid-2024 approached, showcasing significant volatility driven by climatic disruptions.
The survey notes, "The coexistence of good areas sown coupled with greater price volatility suggests extreme weather events significantly impact production and supply chains." This quote encapsulates the challenges faced by farmers trying to maintain stable prices amid severe climate fluctuations.
Climate change is not the only concern affecting food prices; post-harvest losses also play a significant role. Despite increased production, many horticultural crops suffer losses due to inadequate storage infrastructure, which is particularly damaging for perishable goods like vegetables. The Economic Survey determined, "This data should be used to identify areas for improvement and make informed policy decisions..." underscoring the importance of enhancing market interventions and agricultural practices.
A breakdown of the Consumer Food Price Index revealed alarming statistics. Vegetables and pulses, which hold 8.42 percent weightage within the CPI basket, contributed to 32.3 percent of the overall inflation as of FY25. When excluding staple food items such as tomatoes, onions, and potatoes from the equation, average food inflation showcased drastic relief, standing at just 4.3 percent—4.1 percent lower than the actual rates recorded. This spotlight on vegetables emphasizes their outsized influence on household expenses and economic stability.
Supply chain disruptions, largely attributed to climatic conditions, have been at the forefront of driving price volatility. The Economic Survey highlights the challenge of maintaining stable pricing due to erratic weather events leading to sudden supply shortages. Further exacerbated by insufficient storage facilities for perishables and transportation bottlenecks caused by extreme weather, these factors create substantial hurdles for producers and traders alike.
Recent years have seen production fluctuations of tur dal (pigeon pea), which fell by 13.6 percent during 2022-23 and 10.8 percent during 2023-24 compared to preceding averages. Coupled with intermittent successes seen across various vegetable crops, this majestic productivity suffering undermines India's ability to manage food inflation effectively.
To combat the rising inflation, the Economic Survey advocates for focused research and development initiatives aimed at generating climate-resilient crop varieties. Stakeholders have called for enhancing yield potential and reducing instances of crop damage, ensuring greater food security amid tumultuous environmental conditions. Government initiatives could include implementing data collection systems to monitor agricultural productivity and seasonal price movements, forming the basis for informed policy recommendations.
While expectations forecast potential softening of commodity prices over the next two years, contingent on stable monsoon conditions and improved government interventions, the immediate realities dictate urgency. With the increasing prevalence of climate-related agricultural challenges demanding immediate attention, it becomes imperative for stakeholders—government, farmers, and supply chain entities—to collaborate on resilient solutions. Ensuring food security remains at the forefront of national priorities as climate change continues to impact financial landscapes.
By addressing these interlinked agricultural strategies and economic policies, India can work toward stabilizing food prices for its citizens, safeguarding the economic well-being of households affected by inflationary trends. Only by engaging with these rising challenges can India aim for sustained resilience and stability across its agricultural sectors, ensuring ample availability of affordable food for its burgeoning population.