Not just India, the whole world is witnessing food crisis; here’s why

The world and India are currently witnessing a resurgence of food inflation

 

 

 

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The world and India are currently witnessing a resurgence of food inflation largely triggered by Russian invasion on Ukraine. Between September 2021 and April 2022, consumer food price inflation in India has risen from 0.68% to 8.38 percent year on year. Through much of 2020-21 and 2021-22, the headline Consumer Price Index (CPI) inflation rate remained well above the 4% target of the Reserve Bank of India (RBI) and often even above the 6% upper limit of the tolerance band.

The story is no different for the rest of the world. According to a recent report by United Nations International Children's Emergency Fund (UNICEF), since the start of the year, the escalating global food crisis has forced an additional 260,000 children – or one child every 60 seconds – to suffer from severe wasting. As a result of the global food crisis, UNICEF also estimates that the cost of treatment of child wasting has already increased by an estimated 16 per cent, driven largely by increases in the price of essential nutrition commodities and their raw materials.

While COVID-19 has strained the food market for two years by tightening food stocks, supply chain bottleneck and export restrictions, the recent convergence of all these factors coupled with Russia-Ukraine war has sent food inflation rates spiking across the world.

Apart from India, Europe and US too has seen a spike in CPI. The U.N.’s food price index showed prices are now 75% above pre-pandemic level. Lebanon, which is heavily dependent on food imports saw the price index rise of 3,200 percentage points. Food prices are also at record-high in several countries like Argentina, Canada, Iraq, Japan, Malaysia etc.

Together, Russia and Ukraine export nearly a third of world's wheat and barley. The former is also the top global producer. Since the war, Ukraine has only been able to export one-third of grains it used to earlier. On the other hand, western sanctions on Russia have disrupted supply chain of fertilizers, ammonia, urea and natural resources.

Policy changes has also helped soar global food prices. In recent months, close to 20 countries have imposed restriction on food exports or have raised import taxes to stabilize prices and protect their local markets. In May, India too had banned wheat exports to meet its local demand.