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.

Quarterly demand for gold rises to $14.5bn

The global demand for gold jewellery increased by 37 per cent at $14.5 billion in the second quarter of financial year 2007-08 as compared to the demand in the second quarter of fiscal year 2006. The trend was particularly strong across key gold markets like China, India, Middle East and Turkey.According to the gold demand trends released by the World Gold Council (WGC), factors like return to normal levels of the gold price volatility, growing acceptance by the consumers of a price that averaged six per cent above the gold price in the same period a year ago and strong economic performances in the key consuming regions helped the metal to set records in the second quarter of the current fiscal.
In tonnage terms, India achieved all-time records in gold jewellery and its retail investment. Turkey noted a record demand for both the categories in the quarter while Russia recorded its highest ever increase in the jewellery demand. The global demand for gold in the same quarter increased by 19 per cent at 922 tonnes, a 27 per cent increase in value at $19.8 billion on year-on-year basis.
According to World Gold Council chief executive officer James Burton, "India’s total demand for gold of 317 tonnes in the second quarter of financial year 2007 was equivalent to half of the global mine output in the same quarter. Key factors like stable gold prices, a booming economy and Akshaya Thritiya festival have contributed to the demand for gold despite its high price of $600 per oz in the second quarter."
"The dollar value of the gold demand has more than doubled in the country within a span of four years," the World Gold Council chief executive told this correspondent adding that India is the world’s largest gold importing country.