Index falls, but prices soar sky-high

Price rise: Essential commodities continue to be beyond common mans reach

 Exactly one year after, though the inflation has turned into deflation (It reached the negative territory at -1.63 per cent), the prices of essential commodities continue to be sky-high and burn a huge hole in the common man’s pocket.

Take for instance rice, the staple food of Karnataka. The average price of rice (old variety) has reached Rs 39 per kg from Rs 24.96 during the corresponding week of the previous year - a jump of Rs 14.

Sugar, another essential commodity, has gone up to Rs 25.10 per kg from Rs 17.20 in June last year -- increase of Rs 7.9 per kg. Even Ragi, which was known as poor man’s food, has now become costlier. The average price of Ragi is Rs 15 a kg compared to Rs 10 last year.

Along with essential commodities, prices of vegetables too have gone up (though the prices differ from place to place). According to the data available at the State department of Statistics, monthly average prices of essential commodities (primary commodities as listed in the Wholesale Price Index) are going up steadily.

Both wholesale and retail prices are increasing. If wholesale merchants are to be believed, the prices will go further up and there is no sign of prices of any commodity falling in the near future.

Prices are rising despite the monster of economic slowdown affecting all sections of society. Salaries have remained stagnant, and in many cases have come down. This has forced families of all income groups to cut down on their spending.

A random survey of family spending on food items revealed that the monthly budgets have ballooned in the last one year. The monthly kitchen budget of a family of three has shot up by Rs 700 to Rs 1,000, while in case of a family of five, it has gone up to Rs 1,400 to 1,800 more every month.

Why do the prices go up despite deflation? “Inflation or deflation trends are monitored through wholesale price index (WPI).

The Index is constructed based on weekly wholesale prices of 435 representative commodities. Of these, only 98 are primary commodities (mainly food items) and the rest are manufacturing goods and raw materials like fuel, power, light and lubricants.

While the prices of manufacturing goods have come down, primary commodities’ prices have gone up,” M R Narayana, Professor of Economics at Institute for Social and Economic Change explained.