Keep watch on food prices

You can call it the potato effect. The humble potato, an essential household vegetable, triggered the rise in the wholesale price index, which jumped to 5.77 per cent in June, against 4.43 in May. Potato inflation hit its peak of 99.02 per cent, against 81.93 per cent in May, while onions rose 18.25 per cent in June, against 13.20 per cent in May. What is of concern is that while food items rose overall by 1.80 per cent in June, against 1.60 per cent in May, vegetables prices jumped to 8.12 per cent from 2.51 per cent in May. This could be seasonal due to the weather. But for an economy as large and fast growing globally as India’s, the government must think ahead. There is a critical need for a huge number of cold storage warehouses so that during a surplus perishable items like vegetables can be stored. India is a high cost economy as excessive money is in circulation. As on June 6, it stood  at Rs 140,552 billion. The Seventh Pay Commission has also added to the pressure on prices.

Experts say food prices could spurt due to the MSP hikes announced by the government. But MSP barely covers a farmer’s costs and is only on a few items. Food prices aren’t the only culprits. Fuel prices, driven by global factors, have also risen, as have the cost of clothing and footwear, to name just a few. While cost is a reflection of demand and supply, it is necessary for the government to ensure the supply side is increased through cutting waste in perishable items or incentivising the supply side.