Extent of food items price rise remained relatively modest in Covid 2nd wave Vs first: RBI article

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August 17, 2021 9:15 PM

The article, which is based on the retail and wholesale prices of 22 food items during the COVID period, showed that mark-ups increased on average during the first nation-wide lockdown period of March-May 2020 and persisted even during the subsequent unlocking phase, driven predominantly by market centres which faced high-intensity lockdowns as measured by the mobility indices.

RBI on food price rise during Covid-19 pandemicAs regards the first wave of the pandemic, it said, the price margins increased on average during the lockdown period by 7 per cent, which persisted with some moderation in the subsequent unlocking phase.

The extent of price rise of food items remained relatively modest in the second wave of the coronavirus pandemic as compared to the first wave mainly on account of better supply management by the governments, said an RBI article.

The article, which is based on the retail and wholesale prices of 22 food items during the COVID period, showed that mark-ups increased on average during the first nation-wide lockdown period of March-May 2020 and persisted even during the subsequent unlocking phase, driven predominantly by market centres which faced high-intensity lockdowns as measured by the mobility indices.

“During the second wave of COVID-19, however, reflecting the less stringent and localised nature of lockdowns as well as better supply chain management, the extent of increase in mark-ups was relatively modest,” it said.

The article has been prepared by Jibin Jose, Vimal Kishore, and Binod B Bhoi from the Department of Economic and Policy Research, RBI.

The central bank, however, said the views expressed in this article are those of the authors and do not represent the views of the Reserve Bank.

As regards the first wave of the pandemic, it said, the price margins increased on average during the lockdown period by 7 per cent, which persisted with some moderation in the subsequent unlocking phase.

Moreover, the increase in margins was found to be predominantly driven by high intensity lockdown centres, indicating the role of the lockdown, it said.

Secondly, it added, there was considerable heterogeneity in the impact of lockdown on margins across commodities — pulses and edible oils showed sharp increases reflecting tight domestic supply-demand conditions, while cereals and milk did not show any significant impact due to excess supply and robust supply chains.

The situation was better during the second wave of the pandemic, it said, adding localised lockdowns did not have a significant impact on margins across centres at the aggregate level, although commodity/sub-group level differences persisted.

Pulses and edible oils registered an uptick in margins due to continued tight supply-demand conditions, although of relatively lower magnitude, while margins fell in case of cereals and vegetables, reflecting the less stringent nature of lockdown as well as better supply management by the governments during the second wave, it said.

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