Price rise is a pet peeve for voters. Can it shape poll results, too?

Inflation, although not the only factor influencing voter behaviour, has historically triggered considerable concern ahead of elections—whether it was the skyrocketing onion prices before the 1998 polls or the double-digit inflation prior to 2014. The recent price pinch has forced the current government, too, to announce measures such as the reduction in petrol and diesel prices. “If you see the nature of inflation shocks in India, they tend to be more on the supply side, which is food and fuel, and the levers to contain those happen to be in the hands of the governments," said Renu Kohli, senior fellow at Centre for Social and Economic Progress (CSEP).

Several factors such as drought, crude oil prices, global commodity prices, and food production often influence inflation. The Modi government initially benefited from the collapse in crude oil prices, which kept inflationary pressures low during his first term. However, the second term saw inflation consistently exceed the medium-term target of 4% due to disruptions caused by the pandemic, volatility in food prices, and high commodity prices, among others.

Food, in particular, has been a pain point. In six of the 10 fiscal years under the BJP’s regime, average food inflation exceeded the headline inflation rate. This is crucial as food accounts for nearly 46% of the consumer price index (CPI) basket. A Mint analysis shows that food inflation’s contribution to overall monthly inflation was more than 50%—well beyond its designated weight—over one-third of the time since Modi took office.

People’s perception

Inflation has not only been rising in the official data but in the public’s mind too, despite the government, time and again, claiming success. It has nearly halved from 10.1% in 2012-13 to 5.4%, but 2023-24 was the fifth consecutive year when inflation was higher than the 4% target. High prices of cereals and pulses, among other food items, have particularly been a price pinch for all sections of the society.

According to a pre-poll survey by the Lokniti programme of the Centre for the Study of Developing Societies (CSDS), nearly one in four Indians said price rise would be the most important issue while voting this time, much higher than the last two polls. In another survey the research institute conducted last year, nearly 57% of the respondents said the Modi government’s performance on keeping prices under control had been “somewhat bad" or “very bad"—contesting the government’s self-assessment.

The government has tried to control food prices by releasing buffer stocks and imposing export bans, but prices have proved sticky and vulnerable to seasonality, erratic monsoon patterns, and trends in the global markets. “We have a fixed set of (fiscal) tools that all governments in the last 20-25 years have been using when there are agricultural shortfalls, but there have been no deep-rooted reforms as such in the farming sector, which I think is the root cause of these problems," said Madan Sabnavis, chief economist, Bank of Baroda.

Eye on elections

One factor that distinguishes the previous Congress-led era from the current BJP government on the inflation front is that this time, India is not alone in battling high inflation. During the 2010–2014 period, when India’s inflation averaged close to 9%, inflation in the rest of the world was about 2%, according to a Barclays analysis. In Modi’s second term, inflation has still been as high as 5.8% (2020–2024), but the world has also seen price rises at 3.8%—a much narrower gap. As central banks globally battle inflationary pressures, the Modi government may choose to find solace in it being a global problem, not fully stoked by domestic policy failures.

But as the stakes run high in the ongoing polls, even as Modi seems undefeatable against a frail multi-party alliance, the government has turned to the tried-and-tested formula of announcing measures to ease the price pinch to woo voters. Petrol and diesel prices were cut by ₹2 per litre last month even though crude oil prices were on the rise. This was then followed by a cut in prices of liquefied petroleum gas. Additionally, the government released a buffer stock of essential food items such as onions at a subsidized rate, and imported pulses last year.

While the government’s track record on inflation may not be as bad as its predecessor’s, the matter sure has been important enough to evoke last-minute measures.

This is the sixth part of an ongoing Plain Facts series covering the top election issues and the government’s report card after nearly 10 years in power.

Part 1: In charts: Story of polls, freebies and politics

Part 2: Why low unemployment rate hides the full picture

Part 3: A decade of flip-flops on farmers’ issues

Part 4: Inadequate government funding keeps healthcare, education in crisis mode

Part 5: Modi govt’s mixed record on corporate reforms