CPI inflation at 15-month high of 7.44pc; not good news in election yr
Retail inflation of 7.44 per cent for July 2023, rising to a 15 month record, is not good news for the government when general elections are just months away. It is not as if vegetables, under the leadership of precious tomatoes , are alone responsible for taking retail prices to a boiling point but other items of a family meal -wheat, rice, pulses, spices- have also become quite expensive to come by
Prakash Chawla
Retail inflation of 7.44 per cent for July 2023, rising to a 15 month record, is not good news for the government when general elections are just months away. It is not as if vegetables, under the leadership of precious tomatoes , are alone responsible for taking retail prices to a boiling point but other items of a family meal -wheat,rice,pulses,spices- have also become quite expensive to come by.
Of course, vegetable baskets stand out as outliers in the kitchen. Blame it on floods or drought, the annualised rise in the prices of vegetable basket is upward of a whopping 37 per cent. In fact when we look at the disaggregated figures of 13.04 per cent for cereals and products (wheat,atta ,rice and products) 13.27 per cent for pulses and products and 21.63 per cent for spices the headline of 7.44 per cent looks somewhat consolation of sorts. The overall Consumer Food Price Index is up 11.51 per cent year -on-year in July.
In any analytical article,there are bound to be too many figures and one cannot get away from the same; or else the credibility is at stake. There is more to this data, released by the Ministry of Statistics and Programme Implementation (MOSPI) on August 14.
In any analytical article,there are bound to be too many figures and one cannot get away from the same; or else the credibility is at stake. There is more to this data, released by the Ministry of Statistics and Programme Implementation (MOSPI) on August 14.
When the Reserve Bank of India unveiled its credit policy review just a few days ago on August 10, it retained its benchmark interest rate at 6.5 per cent hoping moderation in inflation to 4.6 per cent in the first quarter of the current financial year would stay on course, although its Monetary Policy Committee course see prices spiking up in July; it seems apparent from the numbers it had worked on. What is clear: that chances of any reversal downward look remote.
Inflation does not seem to be moderating, for now with fresh floods in Himachal Pradesh, Uttarakhand leading to a surge in rivers flowing downstream to Punjab, Haryana and Delhi. There was a delay in sowing in the summer crop (kharif) of paddy,millets and some pulses. Green shoots at least in Punjab appear to have been damaged, going by farmers' accounts in the media. Even if the price rise is abated, it will be from a high base of above six per cent.
The base effect may sound very technical in nature which only economists could make head or tail about ! But tomato prices can be used as the best example to explain how the base effect plays out. Tomatoes had certainly crossed Rs 200 a kilo in Safal stores in the national capital to return to Rs 99 a kilo on August 14 . That is a drop of over 50 per cent and this should reflect in the vegetable basket at a future date. But can you, as a government, convince people that you have reduced the tomato inflation by half and deserve a pat! A vegetable which generally sells Rs 30-40 a kilo is still selling at Rs 99 ; but the same has dropped from Rs 200 . That is the magic of a base effect maybe for number crunchers , but is of no use to a common man or woman!.
Inflation does not seem to be moderating, for now with fresh floods in Himachal Pradesh, Uttarakhand leading to a surge in rivers flowing downstream to Punjab, Haryana and Delhi. There was a delay in sowing in the summer crop (kharif) of paddy,millets and some pulses. Green shoots at least in Punjab appear to have been damaged, going by farmers' accounts in the media. Even if the price rise is abated, it will be from a high base of above six per cent.
The base effect may sound very technical in nature which only economists could make head or tail about ! But tomato prices can be used as the best example to explain how the base effect plays out. Tomatoes had certainly crossed Rs 200 a kilo in Safal stores in the national capital to return to Rs 99 a kilo on August 14 . That is a drop of over 50 per cent and this should reflect in the vegetable basket at a future date. But can you, as a government, convince people that you have reduced the tomato inflation by half and deserve a pat! A vegetable which generally sells Rs 30-40 a kilo is still selling at Rs 99 ; but the same has dropped from Rs 200 . That is the magic of a base effect maybe for number crunchers , but is of no use to a common man or woman!.
While the standard gauge for the data comparison is year- on year, even the monthly jump from June to July, 2023 is quite long. For the headline number it shot up by 2.93 per cent, the jump was rather steep by 6.66 per cent for food articles . That is quite a burden for the households!
