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To earn better profit, vegetable and food grain stockists/traders hold their stocks with the hope that the prices may go up in the near term, such manipulating activities deteriorate middled class consumers. Majo..

19 Nov 2013

NEW DELHI (Commodity Online): Soaring vegetable prices in India are really a headache for policy makers and common man. In recent months prices of vegetable and other commodities have gone up significantly amid deteriorating Indian currency against US Dollar, crop damage due to excess rain fall activities. The wholesale-price index for onion has jumped 155 percent this year, hitting an all-time high of 820.5 in September, according to a Government data.

Food articles, including fruits, vegetables, milk and eggs, accounted for 47% of the rise in the benchmark inflation gauge, the wholesale price index. The measure increased 7% in October year-on-year basis and compared with 6.46% the month before.

Vegetable prices rose 78.4% year-on-year in October. Onion prices increased by 278.2% while tomato jumped by 122%. Overall food inflation was at 18.2%. Egg, meat and fish increased an annual 17.5% while fruits accelerated 15.9% year-on-year basis.

This year, Indian Rupee is the worst performer against the US Dollar, down 12 percent.

To earn better profit, vegetable and food grain stockists/traders hold their stocks with the hope that the prices may go up in the near term, such manipulating activities deteriorate middled class consumers. Majority of the Indian farmers didn't get any profit from recent rise in the vegetable prices, only the middle men earned money by exploiting farmers and the consumers in the country, according to media reports.

Recent storm in Orissa, excess rainfall activities at key vegetable growing areas in the country were seen pushing up the vegetable prices at spot markets.

While increase in WPI inflation to seven per cent for October against 6.46 per cent for the previous month is surely a disturbing sign, the rise in 'build-up inflation' to six per cent in the current financial year so far against 4.66 per cent in the corresponding period last fiscal clearly indicates that there is still pain ahead, said Rana Kapoor, president The Associated Charmers of Commerce and Industry of India (ASSOCHAM) in a release recently.

The inflationary pressure is being exerted from the primary articles and food prices, which are in a way, inexplicable given the fact that we had a good Monsoon this year. By now, the impact should have been visible, added Kapoor.

Meanwhile, as they were already selling vegetables at exorbitant prices, the retailers faced consumer resistance beyond a point and were not able to increase at the same rate at which traders in the wholesale mandis managed in September. The elbow room available to wholesalers to affect sharp increase was much more than to the retailers, an ASSOCHAM paper has noted.

Vegetable prices increased by 89.37 percent in September, 2013 as compared to the same month last year, the comparative rise observed at the CPI level was 34.93. However, in the urban areas, the retailers were able to effect a price rise of 42.61 per cent while in rural areas, the CPI for vegetables went up by somewhat lesser pace of 31.66 percent, stated ASSOCHAM in its recent release.

However, this does not mean that the vegetables are selling at higher rate in the wholesale mandis than in the retail stores. According to the ASSOCHAM study, what it means is that since the prices at the retail level were already ruling quite high, the retailers were not in a position to pass on the fresh increase in prices witnessed at the backend level of wholesale mandis.

“This also shows that even when prices were moderate in the wholesale market, the retailers were selling at an exorbitant prices with the result that when the price pressure further increased from the back-end, the retailers’ ability to further charge more from customers had a limitation,” it observed.


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