This paper analyses the causes of the high inflation experienced in 12 food commodities between January 2008 and July 2010. It is shown that a majority of the commodities were subject to inflationary pressures due to domestic supply-side constraints. They include pulses, fruits, vegetables, meat, fish, spices, tea, coffee and sugar. Cost escalation was the primary reason for rising
prices of milk and eggs. The high inflation of rice was caused by a complex interplay of factors. With the exception of milk,the paper finds no concrete evidence to support the popular view that the higher food prices in recent years was the outcome of a “secular shift” in food consumption patterns towards high-value agriculture products. Developments in the global economy have influenced the domestic food prices mainly through passing on world oil price increases. High cost food imports played only a very limited role.