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Climate and food price rise: Extreme weather events triggering unprecedented food inflation

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At 14.23 per cent, India’s wholesale inflation rate in November 2021 was the highest in three decades. It did reduce marginally to 13.56 per cent the next month, according to government data released January 14, 2022. But even that is bad news for the Centre ahead of Assembly elections in five states, including politically significant Uttar Pradesh.

Wholesale price index (WPI) inflation is always a cause of concern as it can raise retail inflation. What’s worse, the price rise has been continuous — December 2021 was the ninth straight month of double-digit percentage increases in the WPI. Experts predict the situation to remain the same through the end of this financial year (March 30, 2022).

High December inflation was unexpected: The government had reduced taxes on fuels — a major add-on to overall inflation. So, why does inflation remain high?

As it emerges, food inflation — particularly the rise in prices of vegetables and a few grains — has been a driver of this episode of overall inflation. India’s wholesale price inflation peaked in November 2021 due to a surge in primary food inflation that hit a 13-month high.

Prices of seasonal vegetables jumped unprecedentedly in many states. And this was due to extreme weather events; and this trend is not limited to India.

Food inflation is rising across the world. On January 7, 2022, the Food and Agricultural Organisation’s (FAO’s) Food Price Index showed that food prices were at a decade-high, with an average rise of 28 percent over the previous year. Adjusting for inflation, the average food prices in the first 11 months of 2021 were at the highest in 46 years.

Abdol Reza Abbassian, senior economist with FAO, attributes the current food price rise primarily to climatic conditions. “While normally high prices are expected to give way to increased production, the high cost of inputs, ongoing global pandemic and ever more uncertain climatic conditions leave little room for optimism about a return to more stable market conditions even in 2022,” Abbassian said.

Between 1956 and 2010, there were nine double-digit inflation episodes. Of these, seven were caused by drought conditions, according to the Reserve Bank of India (RBI). In the past six decades, there have been three major episodes of significantly high food prices globally: 1970s, 2007-08 and 2010-14. All these were triggered by weather shocks followed by factors such as increase in oil prices, trade policy interventions and biofuel consumption. The current episode seems to be entirely driven by weather anomalies.

A similar situation caused the last high-price episode in 2019-2020. Rising prices of food items, particularly of vegetables, caused retail inflation to rise to a 68-month high of 7.59 per cent in January 2020.

Warming world, hotter prices

While the inflation figure captured headlines, a crucial analysis of the reasons behind this sustained increase in food prices slipped public attention. Extreme weather events had damaged crops, leading to a collapse of the supply of vegetables at a time of the year when they usually flood the markets.

On the basis of year-on-year comparison, vegetable prices had gone up by 50.19 percent since January 2019. They increased by 45.56 per cent in rural areas and markets during this period and by 59.31 percent in urban areas.

Of the six categories of consumption items used in tabulating the overall inflation figure, food and beverages recorded the highest price rise, thus increasing the overall inflation rate. In 2014, when inflation was an emotive political agenda, RBI pointed out:

One of the traditional explanations for rising food prices has been the supply-side shocks related to weather either because of droughts or floods.

The current global food inflation is driven predominantly by wheat, which reported price rise due to drought and high temperature in major producing countries. In 2021, as various trade reports show, spring wheat production declined by 40 percent in the United States. Russia, the world’s largest exporter of wheat, also harvested less and has now imposed a tax on wheat export to ensure ample stock for domestic consumption. Unusual frosts in Brazil’s coffee bean producing areas in July 2021 have led to a production dip of up to 10 percent.



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Presidential Suite at Sri Jayewardenepura General Hospital opened to the public

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The special ward at Sri Jayewardenepura General Hospital, which had until now been reserved exclusively for the use of the Executive President, was opened for the public for the provision of medical treatment to the general public from Tuesday (24).

This decision was taken jointly by the Ministry of Health and the hospital administration, in accordance with instructions given by President Anura Kumara Dissanayake.

Constructed in 1984 with a grant from the Government of Japan, Sri Jayewardenepura General Hospital was originally established with a capacity of 1,000 beds. However, in line with the initial design, an additional special unit, designated as Room No. 1001, was included exclusively for the personal use of the Executive President.

Over the 42 years since the hospital’s establishment, this facility has been utilised only on a very limited number of occasions. Nevertheless, it has been maintained over the years in anticipation of a possible visit by a sitting President, without being made available for patient use.

With effect from today, this special unit will be utilised for the benefit of general patients receiving treatment at the hospital. This step has been taken in line with the Government’s policy of ensuring the more efficient use of public assets and resources to meet the healthcare needs of the people.

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Cabinet Sub-Committee appointed to streamline the Public Service meets for the second time

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The second meeting of the Cabinet Sub-Committee appointed to ensure the orderly functioning of the public service was held on Tuesday (24) afternoon at the Presidential Secretariat, under the patronage of Prime Minister Dr Harini Amarasuriya.

Extensive discussions were held on the immediate measures required to ensure the uninterrupted delivery of government services to the public and to address the challenges faced by public servants.

Attention was also drawn to maintaining the continuous operation of services under the Ministries of Public Administration, Provincial Councils and Local Government, Health, Education, and Justice. Accordingly, it was decided to ensure that examinations are conducted as scheduled and that essential medicines are supplied to hospitals without disruption.

The challenges in passenger transport services and the railway transport system, as well as future measures, were also discussed at length. Focus was also placed on the steps to be taken regarding the transportation of essential goods.

In addition, attention was given to introducing digital service systems to facilitate working from home and to enhance the efficiency of existing services. It was also noted that these activities would be supervised under the Ministry of Digital Economy.

Instructions were further issued to review the current energy management practices across all ministries and departments and to take steps to implement necessary policy changes.

Minister of Public Administration, Provincial Councils and Local Government A. H. M. M. H. Abeyaratne, Secretary to the Prime Minister Pradeep Saputhanthri, Chief of Staff to the President Prabath Chandrakeerthi, Secretary to the Ministry of Public Administration, Provincial Councils and Local Government S. Aloka Bandara, Secretary to the Ministry of Health and Mass Media Dr Anil Jasinghe, Secretary to the Ministry of Energy Professor T. M. Udayanga Hemapala, Secretary to the Ministry of Digital Economy T. R. W. S. Dhanapala, Secretary to the Ministry of Justice and National Integration Ayesha Jinasena, PC, Senior Additional Secretary to the President Roshan Gamage, and Chairman of the Ceylon Petroleum Corporation D. J. A. S. S. Rajakaruna, along with other committee members, were also present at the occasion.

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Energy Minister indicted on corruption charges ahead of no-faith motion against him

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Jayakody

… first NPPer to face charges under Section 70 of Bribery Act

Colombo High Court has issued summons on Energy Minister Kumara Jayakody to appear in court today (27) to serve indictment in a corruption case filed by the Commission to Investigate Allegations of Bribery or Corruption (CIABOC). Action has been taken under Section 70 of the Bribery Act. The losses suffered by the government have been estimated at Rs. 8,859,708.

National List (NL) MP Jayakody is the first NPP minister or politician at any level to be indicted for corruption. The NPP parliamentary group consists of 159 including 18 NL members.

The summons has been issued by High Court judge Rashantha Godawalage.

Although CIABOC previously in many instances arrested those who had been under investigation and produced them before Magistrate courts, Minister Jayakody has been directly summoned by the Colombo High Court.

The investigation into alleged corruption in procurement during the time Jayakody served the Ceylon Fertilizer Corporation (CFC) started after the change of government in 2015.

According to the CIABOC investigation, the alleged instance of corruption took place in early 2014 towards the tail end of Mahinda Rajapaksa’s second term. At that time Jayakody was CFC’s Procurement Manager, and the CIABOC dragged the investigation until its current leadership under overall speeding up of the cases recently completed the inquiry.

Parliament recently announced that the debate on no-faith motion moved against Minister Jayakody over alleged irregularities in the procurement of substandard coal for the country’s only coal-fired power station at Norochcholai.

SJB MP Mujibur Rahman said that the NPP, having campaigned on an anti-corruption platform during presidential and parliamentary polls in 2025 couldn’t under any circumstances shield minister Jayakody. The indictment of Jayakody over a corruption case that had happened in 2014 and the failure on his part to fulfill obligations as Energy Minister under the current dispensation couldn’t be considered separately, the Colombo District MP said.

The issue at hand is whether the NPP would try to protect Jayakody at the expense of the government, MP Rahman said. Once the NPPer is formally charged in a corruption case the government would find it extremely difficult to keep him in the cabinet, the former UNPer said.

SJB lawmaker S.M. Marrikar recently warned Minister Jayakody that he should be prepared to serve a jail term. The warning was issued at a media briefing that primarily dealt with the alleged irregularities in the procurement of coal and their decision to move a no-faith motion against the minister. Marrikar explained how the crisis coupled with the growing diesel shortage could compel the government to increase electricity tariffs by as much as 18 percent next week. MP Marikkar said that they were eagerly waiting to see who backs Jayakody at the expense of the government during the upcoming  vote on the no-faith motion.

There had been a previous case of a sitting minister being charged under the Bribery Act in respect of corruption perpetrated as a government servant. MP Rahman said that they intended to intensify the ongoing campaign against the government on the strength of the unprecedented corruption case and the outcome of the no-faith motion. “Of course, they have the numbers to defeat our no-faith motion. But, in doing so, they end up with egg on their face. That is the reality,” Rahman said, adding that those responsible for waste, corruption and irregularities whichever political parties they represented shouldn’t expect special status.

MP Rahman alleged that the CIABOC granted special status to Minister Jayakody. All those who had been indicted previously were first called to the CIABOC, recorded their statements and then arrested, handcuffed and produced in court. The media was afforded the opportunity to cover their humiliation, MP Rahman said, but in this case the powers that be paved the way for the accused to receive indictments directly from the Colombo High Court.

“Let us see whether the Bar Association of Sri Lanka responds to this development,” MP Rahman said.

By Shamindra Ferdinando

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