Page 194 - economic_survey_2021-2022

168 Economic Survey 2021-22

grains to the bottom 67 per cent of the population as per 2011 census under the National Food
Security Act, 2013.

5.13 During 2021-22 (April to December), inflation in ‘vegetables’ remained negative at
(-)11.3 per cent; contributing negatively to the overall retail inflation. Though, tomato prices
spiked after end of September 2021 owing to crop damage and delay in arrival of produce in
mandi because of unseasonal heavy rains in producing states of Punjab, Uttar Pradesh, Haryana,
and Himachal Pradesh. Pressure on tomato prices was further exacerbated due to disruption of
tomato supply by heavy rains in in producing states of Tamil Nadu, Andhra Pradesh, Telangana
and Karnataka. In December 2021, tomato prices have moderated with arrival of fresh supplies.
Inflation of onion and potato remained negative throughout the year. Both seasonality and
exogenous shocks impact retail prices of tomato and onion (Box 1).

5.14 Inflation in protein-based items like ‘meat and fish’ remained considerably elevated during
2021-22 (April to December), due to COVID-19 related supply disruptions and high poultry
feed prices owing to high prices of soybean meal. While the average inflation of ‘meat and fish’
has been lower during 2021-22 (April to December) at 8.0 per cent compared to 15.4 per cent
in 2020-21. Inflation in ‘meat and fish’ declined since September 2021, and was 4.6 per cent in
December 2021, the lowest during the current financial year. Inflation in egg has shown steady
decline since July 2021, and remained negative in October 2021 and November 2021. Inflation
in ‘pulses and products’ remained high in the previous financial year, however, declined steadily
since July 2021 due to proactive supply management efforts by the Government.

Box 1: Seasonality and irregularity in the retail prices of tomato and onion

Seasonality in production and irregular shocks are two important components contributing to the
variations in prices of agriculture commodities, more so in prices of perishable commodities such
as tomato and onion. Seasonality in prices is a result of the varying pattern of production of these
commodities during different months of a year. On the other hand, shocks often originate from
uncertain weather conditions and other unpredictable events. Distinguishing between these two,
however, is important as policy can be oriented at least towards addressing the more certain seasonal
pattern of price rise.

A time series often has four components: Trend, Cycle, Seasonal and Irregular. Trend indicates a long-
term rise or fall in prices. A cycle represents a rise or fall in prices that are not of a fixed frequency
such as representing business cycles. Seasonality is of fixed frequency and occurs at particular points
of time during the year. Seasonality in prices could occur due to the seasonal pattern of production of
agricultural commodities or seasonality in demand such as major festivals. Irregular component is the
remainder in a time series after removing the trend, cycle and seasonal components. Its magnitude,
impact and duration are unpredictable a priori.

For the current analysis, the seasonal component of the prices is extracted to identify the seasonality
in these commodities in different months of the year. On the other hand, the irregular component can
be used to identify points of time when various exogenous shocks have caused spikes in the prices
of commodities. The Seasonal-Trend Decomposition Procedure based on Loess (STL) (Cleveland et