The Hindu Business Line : Agflation

Too much ‘paper trade’ unrelated to market fundamentals can cause undue price movements. Shortages encourage speculation. So the farm production base must be strengthened.

Emergence of a real or perceived mismatch between demand and supply would cause prices to rise or decline.

The ballooning prices of breakfast staples and dinner-time favourites around the world — agflation — causes the consumers to spend more on food and less on other goods, making other parts of the economy suffer.

In the US, food constitutes just 14 per cent of the weight of the consumer price index, in China 33 per cent and in India 46 per cent.

The cost of agricultural holdings has risen to record levels, making it difficult for the farmers.

T. V. Jayaprakash Palakkad

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