Commodity prices hurt consumers

The prices of six essential commodities like wheat, milk, tea, spices, vegetables, fish and meat rose by 23-25 per cent in last 12 months, while the growth rate in individual per capita income declined by 1.09 per cent during this period, indicating that common man access to food products remained beyond their reach, according to an analysis by Assocham. The chamber said that barring pulses and sugar, prices of all essential items registered a substantial hike with prices of wheat and rice specifically going up by 30 to 32 per cent in the above period. As against the rise in prices of essential items, the per capita income growth at current prices was recorded at Rs 23,222 in 2005 which increased to Rs 25,788 in 2006, registering a growth rate of 11.04 per cent.
The individual per capita income at current prices, however, further rose to Rs 28,354 in July 2007 but its growth rate came down by 1.09 per cent to stay at 9.95 per cent. Assocham said that this indicates that the real per capital income has not grown or if it has grown it was totally disproportionate to the rise in prices of essential commodities as the purchasing power of the common man has hardly shown any effective improvement. The recent increase in prices of essential products is clearly a case of demand exceeding supplies as a result it was observed that the prices of milk have risen by about 36 per ent and those of spices and condiments by 38 per cent in the mentioned month, said Assocham.
The chamber said that the efforts of the government to tame and contain inflation did not have much bearings on containment of prices of essential commodities as the prices of manufactured goods only came down and not those of essential commodities. The government procurement policy should be flexible and user-friendly while eliminating role of middle-men who are often held responsible for the difference in price between wholesale and those of retail tendencies because of speculation. The speculative tendencies should be curbed the moment these start surfacing, says the Assocham analysis.