Raging Inflation: Why Your Chicken Curry Is the Most Expensive it Has Been in 5 Years

From cooking oil and vegetables to meat and salt, costs of basic commodities have risen sharply in the last five years.

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Mumbai: Everything seems to be getting more expensive by the day.

Be it fertiliser, fuel, power, coal or for that matter, food. Evidently, raging inflation has ratcheted up food prices to levels that will leave one with a bad taste in one’s mouth.

Particularly susceptible to this are non-vegetarians. It turns out that the cost to cook a portion of the good old Punjabi chicken curry in an average Indian household has been rising at a compound annual growth rate (CAGR) of 10% over the last five years.

It is not that vegetarians have had a smooth ride either, but their position seems to be relatively better. The cost of cooking paneer masala has registered a 7% CAGR in the last five years.

These findings are part of the ‘chicken curry index’ framed by TruBoard Partners, a capital solutions provider firm. As per the May 6 research note, costs first zoomed with COVID-19 and the lockdown in March 2020. Initially, volatile vegetable and meat prices, and later, energy inflation ensured a steadily increasing hole in the common chicken-eating Indian’s wallet.

The chicken curry index is a proxy for non-vegetarian food inflation and tracks the weighted aggregate cost of cooking basic chicken curry. The base value of the index is Rs 300 in March 2017. The latest reading of Rs 485 in March 2022 indicates a CAGR of ~10% in the last five years versus Reserve Bank of India’s upper tolerance of 6% retail inflation.

Also read: How Will India Fare in the Brewing Global Food and Fertiliser Crisis?

It is calculated by accounting for the Consumer Price Index levels of the ingredients of the conventional Punjabi recipe, including chicken, onion, tomato, ginger, garlic, refined edible oil and LPG.

The weights assigned to each ingredient are as per the quantity required to cook one kilogram of chicken.

Incidentally, the research note, even if by means of a chicken curry index, opined that the Reserve Bank of India was falling behind the curve and not raising rates aggressively enough. 

“In contrast to conventional financial theories (postulating rising interest rates when inflation is high), interest rates (borrowing costs) went on declining during this period when curry was getting expensive,” Debopam Chaudhuri, Chief Economist and research head of TruBoard Partners observes in the research note.

“One-year average MCLR [marginal cost of funds based lending rate] dipped from 9.03% in March 2019 to 7.76% by March 2022, fanning leveraged consumer demand. While monetary policy, justifiably, was overwhelmed with growth concerns during the last two years, it is extremely important to catch up to the curve and raise rates aggressively. What started as supply-side inflation, has evolved into a demand-led one and any delay now will set off a vicious price cycle,” Chaudhuri notes.

Also read: With WPI Trending at 14.55%, What Do the Inflation Expectation Tea Leaves Tell Us?

In fact, TruBoard Partners apparently was one of the few firms that took a nuanced stand against the status quo position maintained by the Monetary Policy Committee in its April 2022 policy meet. 

In a web note before the May meeting, the firm said the following:

“As per the latest retail inflation (CPI) data released by the Ministry of Statistics and Programme Implementation, inflation spiked to 6.95% in March 2022 versus 6.07% in February 2022. The rate of inflation observed since January 2022 has been beyond RBI’s tolerance level of 4% (+/-2%).

“Consumer and wholesale price levels have been at an elevated level across the globe…The surge in food price inflation in India is typically worrying, as this has a direct impact on government measures to reduce poverty levels.

“The March inflationary trend can be attributed to a surge in food prices, which registered a 7.7% year-on-year growth in March as compared to 5.85% in February. This was in turn driven by oils and fats, vegetables, spices, and meat and fish prices which rose by 18.79%, 11.64%, 8.5% and 9.63% compared to the same time last year, respectively.”

Quite uncannily, it also predicted that the RBI might have to hold a special meeting to address rising inflation levels.

“We don’t expect inflationary trends to be any different in April and May 2022, owing to sticky crude prices, high food prices and sustained bottlenecks in global supply chains. RBI will have to fall in line with its global peers in raising policy rates as early as June, or even earlier through a special meeting if need be. With government bond auctions amounting to Rs 8.45 lakh crores in H1 FY’23, bond yields will witness sustained upward pressures and RBI will do well by giving a decisive direction amidst the uncertainties (by raising policy rates),” it said.