Global Financial Crisis and Food Price Inflation
Dr Priya Mariyat, Dr Aelyamma P J
Associate Professor of Commerce, Maharaja’s College, Ernakulam, Kerala
Received: 26 November 2025; Accepted: 03 December 2025; Published: 19 December 2025
ABSTRACT
The global financial crisis of 2008 triggered widespread economic disruptions, influencing trade, production,
and price levels across nations. One of the most critical outcomes was the surge in global food prices,
threatening food security and economic stability, particularly in developing economies like India. This paper
examines the interconnection between the financial crisis and food price inflation, analyses their impact on
India’s macroeconomic framework, and evaluates policy measures that insulated the Indian economy. Using
secondary data from the FAO, RBI, and MOSPI, the study identifies the trends, causes, and consequences of
price fluctuations and provides policy recommendations to mitigate similar future shocks.
Keywords: Global Financial Crisis, Food Inflation, India, Food Security, Economic Policy
INTRODUCTION
Global Financial Crisis
The third quarter of 2008, the collapse of the U.S. housing market escalated into a global financial crisis with
far-reaching effects. The failure of major financial institutions and liquidity shortages severely impacted global
trade and investment flows. Concurrently, food prices rose steeply due to both structural and cyclical factors.
These developments together shaped the global economic landscape, posing serious implications for
developing economies.
India experienced indirect effects through capital flow disruptions, reduced liquidity, and slowing growth.
Despite these challenges, timely interventions by the Reserve Bank of India (RBI) and the government helped
cushion domestic markets from the full brunt of global volatility.
Financial Crisis in India
The global financial crisis has impact on India indirectly in terms of liquidity problems and lower economic
growth. Developments, on both international and domestic fronts, particularly from mid-September 2008, have
impacted domestic liquidity conditions. The bankruptcy/sell out/ restructuring of some of the world's largest
financial institutions beginning mid-September 2008 brought some pressures on the domestic money and
foreign exchange markets. The global financial environment deteriorated with the number of troubled financial
institutions rising, stock markets weakening and the money markets coming under stress. Central banks in
several major advanced and emerging market economies responded to these extraordinary developments by
synchronized policy actions, including measures for liquidity infusion. The RBI has acted swiftly to augment
liquidity in the system by reducing CRR, SLR and the Repo rate. These measures started in September, 2008
and are still continuing. The global financial crisis had significant impact on economic growth, employment
and food security of poor in India.
The global food, oil and financial crisis have affected India also. The impact is much lower than some of the
other countries. The food prices in recent years have been higher than those in the period mid-1990s to 2004.
The volatility in food prices is likely to continue and would harm the poor. Even before the food crisis, the
poor and vulnerable were significantly left behind. Rising food prices would further undermine the food
security and livelihoods of the most vulnerable by eroding their already limited purchasing power. Poor people
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