The behavior of food group, which has a share of 40 percent in the overall Consumer Price Index (CPI), is not much different across these periods. It is true that food prices grew by 88 percent between June 2007 and October 2010 and by 47 percent between June 2003 and June 2007.
But, their share in CPI inflation in both these periods is not much different; 56 and 51 percent respectively. Moreover, virtually the same items across these time periods are responsible for 80 percent of food inflation. Key among these are wheat flour, sugar, fresh milk, meat, and vegetables. So, is this food inflation entirely because of “supply shocks”?