Food inflation in India: protein products

Food prices in India have increased on an average by more than 10% annually over the period 2006–2007 through 2013–2014. However, unlike the earlier years, food inflation was not just a supply driven phenomenon caused by such factors as adverse climate conditions. It is important to note that during this period it was prices of the so called protein rich items like pulses, fruits, vegetables, eggs, meat, fish and milk that marked high rates of increase. It is thus argued that food inflation has turned structural in the sense that it has prominently been driven by changing demand structure. Keeping this in mind, the current study is intended to focus on the causes of high inflation in protein based items. To this end, following the structuralist approach, we take note of the market structure and long term perspective of the problem. The study covers the period, 1980–1981 through 2013–2014 on an annual basis. Our results confirm that there is the dominant impact of demand factors in determining protein inflation. International food prices are also found to be significant in shaping domestic food prices. For ensuring price stability, demand side management without jeopardizing growth turns out to be considerably important. It is in view of this that sustainable way turns out in improving the supply conditions.