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1. FOOD INFLATION

2. MOFS
(Management of Financial Service)
Presentation
On
Food Inflation
To:
By: Nitin Agarwal.
GR.No.M00031

3. INFLATION
• Inflation is arise in the general level of prices of goods and
services in an economy over a period of time
• Inflation can have positive and negative effects on an
economy
• Current inflation rate:7.9%(2012)
• Inflation is calculated mainly by wholesale price index and
consumer price index

4. CAUSES OF INFLATION
• Rise in Production cost and Labour cost
• Speculation
• External factor
 Rising crude oil Price
 Transportation cost

5. FOOD INFLATION IN INDIA
 Rise in the price of Food Items
 Present Food inflation rate is -1.03 (January14,2012)
 Calculated on the basis of Wholesale Price Index (WPI)
 Calculated by Central Statistical Organization (CSO)

6. PRICE INDICES
• Wholesale Price Indices(WPI)(7.47)
• Consumer Price Indices(CPI)(225.5)

7. WHOLESALE PRICE INDEX
• WPI is calculated on a base year
• The price from whole sale market is taken for calculation
• WPI is available for every week

8. Conti….
• Measure the change in average price level of goods
• A sample set of 676 items are taken for calculation
• Primary Articles
 Fuel and Power(14.45)
 Manufacture Goods(4.8)

9. CONSUMER PRICE INDEX
• Measure estimating the average price of consumer good s and
services purchased by house holds
• Mainly used by developed countries
• Percent change in the CPI is the measure estimating inflation

11. REASON FOR FOOD INFLATION
• Demand and Supply
• Population
• Exploitation of Land
• Climatic changes

12. Conti……
• Change in fuel price
• Lack of interest in agriculture
• Hoarding of food products
• Export of food products

13. EFFECT OF FOOD INFLATION
• A large section of the population are losing out on their
purchasing power
• Force the common man to borrow money from banks and
other financial institutions High food inflation will bring
down India’s economic growth

14. GOVERNMENT RECOMMENDATION
• Revised Monitory Policy
 CRR
 SLR
 Repo
 Reverse Repo

15. GOVERNMENT RECOMMENDATION
• Reduce Tax Rate On food Item
• Utility food item on Subsidized rate

16. Counter Measure
• Effective Use of Monetary policy without effecting growth
rate
• Increase in Productivity Of Agricultural Land
• The essential Commodities act
• Reduce the Gap between the farm price retail price.

17. Conti….
• Make Public Distribution System effective
• Check on middle Man
• Private sector Participation

18. Conclusion
India is a food deficient country .Under this circumstance the
survival of common man is be coming tougher and tougher. In
order to keep pace with population growth, food production
also needs to grow. It is very important for the Government to
control the inflation and ensure that the se circumstances do
not arise again in the future. The passing of food security act
will help to great extend. So lets join our hands together for a
happy nation.