FRONT PAGE | Friday, September 25, 2009 | Email | Print |  | Back
Vegetable prices up 45%, admits Govt
Rakesh Bihari Jha | New Delhi
Percentage rise: Potato 75, dal 21, rice 17
Inflation based on the Wholesale Price Index (WPI) has inched up only marginally even though prices of essential goods have gone up exorbitantly on yearly basis, as reflected by the Consumer Price Index (CPI). The difference between the indices presents a grossly misleading picture of the sharp price rise across the board in consumer goods and deflects the attention from the real plight of those millions who have to manage their expenditure on a fixed income.
The WPI inflation figure, released on Thursday, inched up to 0.37 per cent during the second week of September from 0.12 per cent a week ago, when it first made it into positive territory after 13 weeks. Overall prices of raw food items climbed up by 15.64 per cent during the week ending September 12 year-on-year, driven mainly by a 44.85 per cent rise in vegetable prices. Among vegetables, potatoes turned costlier by 75 per cent, pulses by 21 per cent and rice by 17 per cent.
The prices of other consumer goods are also shooting up and pulses are hovering around Rs 100 kg and sugar Rs 40 a kg. Edible oil is also going out of reach for the aam aadmi, and the humble wheat and staple rice are giving more than pinpricks to the common man.
Processed food items continue their rising trend. The prices were up 12.68 per cent on yearly basis as sugar turned dearer by 43.35 per cent. However, when seen from a weekly perspective, the price rise in essential food items did not appear that sharp except for fresh water fish (up 11 per cent).
The rise in inflation for the week comes despite a high base of 12.42 per cent a year ago. Although inflation at 0.37 per cent does not seem too high as the rate of price rise is measured only on annual basis in India, the inflation has already crossed the psychologically important 5 per cent-mark for this fiscal.
Price rise has become a major issue countrywide, and yet WPI has remained indifferent to the storm buffeting the common man. For better part of the year, WPI remained dormant in negative territory, which implied that prices were going down.
At the same time, the CPI inflation — based on retail prices of items consumed by rural and farm labourers — remained more or less constant at an elevated level of over 12 per cent in August. The CPI is more relevant to consumers as it gives greater weightage to food items and services than the WPI, which gives lower weightage to food items and none to services.
While CPI-based inflation for agricultural labourers inched down to 12.89 per cent in August from 12.90 per cent a month earlier, that based on retail prices for rural labourers stood at 12.67 per cent. Another retail price inflation, which is based on the items consumed by industrial workers, was already at 11.89 per cent in July.
Even the Government has admitted the dichotomy between WPI and CPI and termed it “worrisome”. Finance Minister Pranab Mukherjee said in Bangalore last Saturday, “This dichotomy is worrisome because we are concerned with the high prices of essential commodities and food articles. In the WPI, the weightage of food article is 16, but in the CPI, there are four indices.” In the four-price index of the CPI, food articles have seen the weightage increase to 56 per cent from 48 per cent. “There is a dichotomy on the price front due to negative WPI and CPI moving up,” he added.
Food items with a weight of 57 per cent dominates the CPI and, therefore, is very sensitive to changes in prices of food articles but, on the other hand, food articles in the primary group and food products in the manufactured products group in the WPI series together have a weightage of 27 per cent only. While the CPI gives a weightage of 6.28 per cent to fuel group, WPI gives more weightage to the same group at 14.23 per cent.
A major subgroup in the CPI is the miscellaneous group, which includes services like transport, education, health etc. Services, however, don’t get reflected in the WPI. So, the price movement in the service sector gets reflected in the CPI. These are the reasons that skyrocketing prices are burning a bigger hole in people’s pockets.
The Government has realised this anomaly and it is expected that by the end of this year, the WPI will undergo a complete makeover. The base year will be moved to 2003-04 and 300 new items — like mobile phones and laptops — would be added to the index.
Even the Reserve Bank of India takes note of the CPI and not WPI. RBI Deputy Governor KC Chakrabarty said: “The inflationary pressure is already there. If you see consumer price inflation, it is already 12 per cent. This is an area of concern...”
Email | Print | Rate:
|