It's now all-round price assualt
From T V Lakshminarayan
Tribune News Service

When last week robbers took away 5 kg onions as part of their loot from a South Delhi house, the incident was a macabre reflection of the state of affairs on the price front of essential commodities.

It is not only the price of onions that is making the common man cry. He is a victim of all-round inflation.

Imported edible oils, fruits and vegetables are among the 110 commodities that have recorded a substantial rise in their prices since July this year.

The Union Government as well as the state governments are at their wits’ end about how tackle the price rise crisis as the issue has a bearing on the political stability of governments.

The result has been some knee-jerk reactions from the government. The Centre last week banned the export of potatoes along with onions and put import of pulses in the open general licence (OGL) list.

Trade sources, however, say these measures have little soothing impact on the price front as the main problem is within.

Hoarders, manipulative traders and an unregulated supply system are gnawing at the price line.

For instance, take the case of potatoes. Reports from Gujarat, which produces around six lakh tonnes of the common man’s vegetable, say though the prices are yet to breach the Rs 20 per kg mark indications are that it would soon be moving up and may well touch the Rs 30 per kg mark in the coming weeks.

A crackdown on illegal river-bed farming in the central Gujarat districts is leading to a squeeze on potato supply. In such a situation, steps like banning exports of potato can be of little help, traders say.

The break-up of the annual rate of inflation, though measured in terms of the wholesale price index on a point-to-point basis and which manifests on a much larger scale when it comes to the retail market, is still a good indicator of the state of the markets all over the country.

The inflation rate for the primary articles group continues to remain high. The major price movements in the beginning of October have been in commodities like urad, bajra, gram, arhar, masoor, fruits and vegetables.

Of the 447 commodities that constitute the basket to calculate the wholesale price index, 110 have become dearer. Of this, 59 commodities became costlier by less than 5 per cent, 24 rose between 5 per cent and 10 per cent, 13 witnessed a hike between 15 and 20 per cent and six an increase between 20 per cent and 25 per cent.

The rise in index for food articles has been mainly because of a rise in the prices of food products. Arhar and chicken, maize, masoor, fruits and vegetables, rice, condiments and spices and milk have all recorded an upward increase in prices. Processed food items like jam, jellies and marmalades have also become costlier in the past six months.

Even items other than food products but used daily like tooth powder, talcum powder, and agarbattis have registered a price rise in the past few months.

According to analysts, the problems faced by the common man are not his alone. Manufacturers of consumer products are also hit indirectly as the man on the street reallocates his personal budget for more pressing needs. Gone are the days of buying big bottles of shampoo, hair oil and other small luxuries.

Retail traders are reporting purchases by customers in small quantities. Sachet purchase of various commodities like shampoo and hair oil is on the increase. From a monthly purchase of commodities in the supermarket, the trend even for the bulk of the middle income bracket customers has come down to running weekly errands.

The euphoria of the Fifth Pay Commission wage hike for central government employees and its spill-off effect on the other sectors has been short-lived. The hike is not even enough to meet the inflation.

Contrary to expectations that the pay hike would spark off a demand boost, the tight supply position and higher prices have negated such optimism. The government for example had anticipated that more money with the consumers would generate a demand for items like washing machines, refrigerators, televisions and cars. But results narrate a different story. Their sales are on the decline and there is a stockpiling of inventories.

The sales gimmick of various white goods manufacturers like offering a television set, washing machine and refrigerator at the cost of one gadget is nothing but a measure to reduce their stocking costs. This would avoid carrying over of economic losses to the next accounting period. Though in some cases the customer could be the winner it would be at the cost of the manufacturers. In keeping with the saying, "there is no free lunch", the customer would finally be asked to reimburse the industry’s losses in the future in some other way.

In this scenario, a leading consumer activist, Mr H D Shourie of Common Cause, has taken the initiative to help the prices come down. His mantra for the consumers is to boycott the purchase of all those goods which are overpriced. To begin with, he has targeted onions. If this boycott succeeds, the common man could get some succour in the future.