Oh Onion, My Onion — The Effect Of Rising Food Prices on Economy

The price of onion has surged 400% and the prices of other major essential food commodities have also increased steadily. But something else is going down — the growth of the economy.

What Happened?

The retail inflation surged to 5.54% in November, touching an over three-year high because the prices of food products like vegetables, pulses and protein rich items increased significantly. On the other hand, the industrial sector output (IIP) plunged for the third straight month to 3.8% in October.

Is Onion Responsible For The Rise In Inflation?

Kind of.

The price of onion has touched ₹200 per kg in some major cities. However, the prices of other items like rice, wheat, flour, pulses, oil, tea, sugar, jaggery, vegetables, milk, potato and tomato have also seen a gradual surge in prices. In short, food is becoming expensive.

What About The Fall In Factory Output?

The government data showed that all three key sectors such as mining, manufacturing and electricity are declining and this happens because of one major reason — There is a weak demand.

No Demand. No Growth.

The country’s power demand declined in November and consumption has been falling for four consecutive months. Diesel consumption is also decreasing because nobody is buying domestic passenger vehicles anymore. Data showed that domestic passenger vehicle sales plunged for the 13th straight month in November.

In conclusion, the industrial output is slowing and economic growth is weakening but we are yet to see any fruitful result coming out of the measures, that were employed by the government to help revive growth. It’s time that government notice the insufficient food supply, high telecom tariffs, declining demand and consumption and draft policies which help the common people.

Because, to be honest, there is no point in saying things like, “”The automobile industry is now affected… because of mindsets of millennial…” and “I don’t eat much onion….” Because if a country’s finance minister says these immature statements, who will we turn to?