Food prices have been in the news for some time now. The Economic Survey 2023-24 mooted, somewhat controversially, the idea that food should perhaps be excluded from inflation targeting, and recent reports note that the panel reviewing the Consumer Price Index (CPI) could consider reducing the weightage given to food to better reflect current household consumption patterns.
Notwithstanding these debates, the fact remains that food items have been and will remain key components of the CPI and the CPI-Food (CPI-F), seen as key barometers of cost of living and of overall inflation in India. For example, in 2022-23, food accounted for as much as 46% of the value of an average household’s consumption in rural India.
Despite its usefulness in tracking price trends in food prices, the CPI-F is of little value in assessing whether Indians can afford healthy diets, that is, diets that meet their nutritional needs. Both globally and in India, the cost and affordability of a healthy diet has been identified as a critical constraint to achieving diet quality. Countries where nutritious diets are least affordable (as a share of household expenditure) have a greater prevalence of stunting and micronutrient deficiencies. A recent estimate of the Food and Agricultural Organization (FAO) suggests that more than half of India’s total population (55.6%) is unable to afford a healthy diet, higher than the South Asian average of 53.1%.
If one is to direct public policy to promote healthy diets, one must first be able to track their costs and affordability. Thus far, the government, both at the Center and in the states, has focused primarily on the CPI-F. The government has further, justifiably, focused on tracking individual food groups that are deemed sensitive from the perspective of either international or domestic trade, but that do not sufficiently reflect nutritional or health concerns. For example, tomato, onion and potato (often referred to as TOP) are not particularly nutritious, but are widely consumed and their prices have often been a politically sensitive issue.
There is a case for routinely computing the cost of a healthy diet (CoHD) alongside the CPI-F. The CoHD calculates the minimum per-person, per-day expenditure needed to meet food-group-specific calorie recommendations from the national food-based dietary guidelines, or FBDGs. In the case of India, the FBDGs are developed by the Indian Council of Medical Research’s National Institute of Nutrition (ICMR-NIN).
We used weekly prices collected and published by various arms of the government for 330 urban centers and 68 commodities for January 2018 to March 2023. For each commodity in our price dataset, we used the India Food Composition Tables to calculate the quantity (in grams) one would need to consume to meet the ICMR-NIN FBDGs. This allows us to identify the cheapest items within each recommended food group. We added the cost of these least-cost items across food groups to obtain the CoHD at a centre-week level and aggregated this across centers using population weights to obtain a national average CoHD.
A comparison of the weekly national CoHD and the monthly CPI-F, normalized such that the first week of 2018 is set to 100, makes it clear that the two are not proxies of one another, though they are positively correlated. First, the CoHD and CPI-F often diverge substantially and can move in opposite directions, rendering the CPI-F an unreliable indicator of inputs for nutritious diets. Second, not only is the CoHD generally higher and more volatile than the CPI-F, shocks such as Covid-19 tend to exacerbate the gap between the two. This suggests that in times of crisis, the CPI-F may underestimate the cost of procuring a healthy diet.
The CoHD can be used in a variety of ways. By comparing household food expenditure across food groups with the food-group-wise minimum expenditures needed to achieve a healthy diet, we can assess whether households need to spend more to be able to consume healthy diets — making a case for increased transfers — or whether existing expenditures are sufficient but need to be reallocated to healthier foods, which makes the case for improved information and consumer awareness. The CoHD is also a useful metric to incorporate in program design and costing, including for social protection programs.
Governments in several developing countries have recently embarked on systematic efforts to publish the CoHD routinely, offering useful examples of proactive surveillance of the cost of healthy diets. India already has the capacity to undertake a similar effort. Further, such an effort is not only possible but also necessary in a context where these data on prices are no longer available publicly.
It is imperative that the government takes the lead in publishing periodic reports on the CoHD, thereby offering a credible basis for understanding the key drivers of these costs and considering solutions to make healthy diets more affordable. This would be a simple but significant step towards attaining healthy diets.
Sudha Narayanan, Kalyani Raghunathan, and Anita Christopher are with the International Food Policy Research Institute (IFPRI), New Delhi. The views expressed are personal
