Essential items prices up by 25%

Essential items prices up by 25%
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First Published: Thu, Sep 06 2007. 01 02 PM IST
Updated: Thu, Sep 06 2007. 01 02 PM IST
New Delhi: Prices of six essential commodities like wheat, milk, tea, spices, vegetables, fish and meat rose by nearly 23-25% in the last 12 months, starting July 2006 to August 2007 with growth rate in individual per capita income declining by 1.09% during the period, indicating that the common man’s access to food products continued to remain beyond reach.
According to Assocham’s analysis on ‘Price trends of last 12 months’ which also pointed out that spices and condiments, meat and fish, milk and milk products and fruit and vegetables were items which showed maximum price fluctuations, to the extent of 23-25%.
Findings
* Minor adjustments noticed in prices of pulses which fell in the bracket of Rs42 to Rs52 per kg during August 2007 where as in the previous month the same was hovering in the bracket of Rs45 to Rs67 per kg.
* Sugar was sold at Rs16 per kg in July 2007 which witnessed a minor fall by Rs2 per kg and was sold at Rs16 per kg in August 2007.
* Barring pulses and sugar, prices of all essential items registered substantial hike with prices of wheat and rice specifically going up by 30 to 32% in the above period.
* As against rise in prices of essential items, per capita income growth at current prices was recorded at Rs23,222 in 2005 which increased to Rs25,788 in 2006, registering growth rate of 11.04%.
* Individual per capita income at current prices rose to Rs28,354 in July 2007 but its growth rate came down by 1.09% to stay at 9.95%.
* Real per capital income has not grown as such or if it has accorded growth, it was totally disproportionate against rise in prices of essential commodities as the purchasing power of common man showed marginal improvement.
* Recent increase in prices of essential products is clearly a case of demand exceeding supply.
* Resultantly prices of milk rose by about 36% and those of spices and condiments by 38% in the mentioned month.
* Rise in prices of egg fish and meat products was to the extent of 10-15% respectively.
* Efforts of the government to tame and contain inflation did not have much bearing on containment of prices of essential commodities as the prices of manufactured goods only came down and not those of essential commodities.
Recommendations
* Government should come out with two-pronged strategy to manage expectations of common masses by buying future options in international markets.
* Execute strategy to improve production and productivity of essential products like wheat and rice including fruit and vegetables.
* Government procurement policy to be flexible and user-friendly and should eliminate role of middleman who is often held responsible for manipulating price differential between wholesale prices and those of retail with speculative tendencies.
* Speculative tendencies should be curbed the moment these start surfacing.
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First Published: Thu, Sep 06 2007. 01 02 PM IST