Food Inflation is Getting Worse

Inflation it is defined as a rise in the average prices of goods and services over a period of time, meaning that each single unit of currency is worth less and less as time goes on.

For example, those who grew up in the fifties might talk about being able to go to the movies for fifty cents. Twenty-five cents bought the ticket, while the other twenty-five cents bought a soda, popcorn, and maybe even a candy. These days and equivalent trip to the movies would cost well over twenty dollars for just one person.

And while some goods and services can be cut back on, such as trips to the movies, some are more difficult. That’s why food inflation can be one of the most devastating types of inflation in any economy.

“Food inflation hurts consumption, government finances, the balance of payments and monetary policy flexibility,” said Moody’s senior analyst Atsi Sheth. Raymond McDaniel is CEO of Moody’s, which says that food inflation slows down economic growth since families aren’t able to spend as much on non-food goods.

Food inflation means the wholesale price of food increases, forcing families and individuals to spend more money than they normally would just to feed themselves. In India, most households spend more than half their income on food—57% in rural areas, 44% in urban homes, and 65% in very poor rural areas.