In July, India witnessed a surge in CPI inflation, reaching a 15-month peak at 7.44 per cent, a significant jump from June’s 4.81 per cent. This reveals two primary insights for July’s inflation narrative: Firstly, the primary driver of this inflation spike was food prices. Secondly, the inflation isn’t solely attributed to vegetables, especially tomatoes. Instead, a wider range of food items, including cereals, pulses, and spices, have contributed to the price pressures. Climate risks of irregular weather and rainfall patterns along with a pick-up in global food inflation resulted in domestic food prices presenting an absolute shocker in July 2023.
Rising inflation, especially the prices of food items, has consistently been a crucial election issue in India. In the 1970s when the Janata Party was in power at Centre, Indira Gandhi toured across the country with a garland of onions around her neck to garner public support against the exorbitant rise in onion prices. In the 1980 Lok Sabha elections, she turned it into a major issue and won the polls to become the Prime Minister again. Despite the support garnered by the Atal Bihari Vajpayee government after the successful nuclear test in Pokhran in 1998, the BJP had to face defeat in the Delhi Assembly elections due to the increasing onion prices. Since then, the BJP has not been able to win the Delhi Legislative Assembly elections.
This is the reason why the BJP has started preparing strategies to counter the opposition parties on the issue of inflation. Union Petroleum Minister Hardeep Singh Puri has repeatedly claimed that the Congress is responsible for the higher prices of petrol and diesel due to the burden of oil bonds issued during UPA government’s tenure. He asserts that while the BJP-ruled states have reduced VAT and other taxes on petrol and diesel to provide relief to the public, the opposition-ruled states are not doing so in their respective states. The minister also says that the impact of global issues like the Covid-19 and the Russia-Ukraine war, have affected India too and led to the increase in prices of commodities.
To counter the accusations made by opposition parties on the issue of inflation, the BJP will try to deflect attention by propagating the achievements and welfare schemes implemented by the government, especially those aimed at the poor and the middle-class. During the recent days, heavy rains in several states of the country, including Uttarakhand, Himachal Pradesh, Maharashtra, Karnataka, and Uttar Pradesh, have led to an unprecedented increase in the prices of goods, especially vegetables. However, the BJP claimed that the Narendra Modi government is making efforts to control prices. The extent of the jump in food inflation and other upside risks to inflation can compel the Reserve Bank of India to go in for at least a symbolic rate hike to anchor inflationary expectations.
