Food Price Dynamics During the Pandemic

Abstract

Coronavirus disease 2019 (COVID-19) posed a serious challenge to food production and distribution worldwide. There were major disruptions in supply chains due to mobility restrictions and a slump in demand due to the loss of livelihoods and incomes. What effect do these offsetting movements have on prices? Which commodities experienced price increases/slumps? Were these localised or widespread across regions? What is the relative contribution of sub-groups to the overall trends? We delve into these issues using wholesale and retail price data to understand the price dynamics in India during COVID-19, using the previous four years as the reference point. The analysis revealed that the retail margins were consistently higher in 2020–2021 indicating the persistence of local shortages for all commodities. Owing to government support through procurement and distribution, the effect on cereals’ prices was minimal. Perishables like vegetables and meat/fish marketed in raw form through informal/petty trade networks, faced maximum erratic behaviour, while milk, marketed in processed form by organised intermediaries, experienced a moderate impact on prices. Fruits, a perishable but with high-income elasticity of demand, witnessed muted prices possibly due to income erosion. Pulses and oils/fats, imported in large quantum, saw a sharp price increase due to local supply bottlenecks combined with international trade disruption. JEL Codes: E31, Q11