NEW DELHI: A steep rise in household inflation, and financial uncertainty on account of the pandemic is forcing consumers to restrict themselves to essential purchases while postponing long-term expenditure. Even as travel remains restricted, the normal costs of a household have gone up considerably. For instance, retail prices of edible oils have shot up by 60-90 per cent in just over a year. A litre of mustard oil, which cost around Rs 110 last year and is considered essential in many households, is now selling at Rs 225.
Even the price of pulses has appreciated significantly—by 30-40 per cent over the past six months. Plain tur daal is selling for Rs 114-124 per kg, up from Rs 80 per kg last year. High petrol and diesel prices are also adding to the common man’s woes. The price of petrol in Delhi stands at Rs 92.58 per litre while diesel is now selling at Rs 83.22. Petrol prices have already crossed the Rs 100 mark in many cities and, despite lockdowns and travel restriction, fuel prices have a cascading impact on the other commodity prices.While the supply of wheat has increased and market prices have softened, the price of wheat flour has still not gone down, and remains stagnant, while the price of rice has gone up by 15-25 per cent, depending on the quality.
Several packaged consumer goods categories, such as soaps, tea, and edible oils, have also seen a price hike for the second quarter in a row, owing to high raw material costs. According to Soumya Kanti Ghosh, the group chief economic adviser at State Bank of India, the steep fall in retail inflation in April to 4.29 per cent from 5.52 per cent in March is deceptive, since rural core inflation has jumped to 6.4 per cent. Increasing health expenditure due to the pandemic is also having a meaningful impact, and headline inflation does not provide the best perspective to assess the stress in the system.
Going forward, supply-side constraints, a hike in input costs, and logistics issues arising from lockdowns are expected to keep prices high for a few months. “The build-up in my input price pressures across sectors, driven in part by elevated global commodity prices, remains a concern,” RBI governor Shaktikanta Das said in the monthly economic report by RBI released on Monday.
The report by the central bank has also warned that the biggest impact of the second wave has been on consumer demand. “High frequency indicators for April and May 2021 are scanty in view of data lags, but they suggest that the biggest toll of the second wave is in terms of a demand shock - loss of mobility, discretionary spending and employment, besides inventory accumulation,” the RBI’s report pointed out.
WPI speeds up to 10.49% in April
India’s wholesale inflation accelerated to 10.49 per cent in April due to a surge fuel and manufactured product prices. Food prices rose 4.92 per cent with pulses, fruits and eggs, meat and fish rising 10.74 per cent, 27.43 per cent and 10.88 per cent, respectively. Fuel and power inflation stood at nearly 21 per cent, while manufacturing products rose 9.01 per cent