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Deflation in the Food Sector
January 21 , 2026
10 hrs 0 min
13
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- India’s food prices slipped into deflation (-0.2%) in 2025 for the first time since 2014, contributing to a 12-year low retail inflation of 2.2%.
- Deflation is a persistent fall in the general price level, which increases the purchasing power of money.
- Major causes include weak demand, oversupply due to high productivity, and tight credit or high interest rates.
- It can trigger a deflationary spiral, causing delayed purchases, reduced business profits, higher unemployment, and increased real debt burden.
- Policy measures to tackle deflation include expansionary monetary policy (lowering repo rate, quantitative easing, injecting liquidity via Open Market Operations – OMOs) and expansionary fiscal policy (increasing public spending, cutting taxes).
- Deflation differs from disinflation, which is a slower rise in prices rather than an actual fall.
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