Advertisement
Wednesday, Dec 01, 2021
Outlook.com
inflation

Tomatoes Of Wrath

Wheat, rice, pulses, veggies, petrol, diesel, home loans are all up. Inflation will stay a while.

Tomatoes Of Wrath
Narendra Bisht
Tomatoes Of Wrath
outlookindia.com
-0001-11-30T00:00:00+05:53

She's right. This year, prices of primary commodities and vegetables are ruling much above their six-year averages. The spiral is reflected in the wholesale price index (WPI) that went up to 5.24 per cent on June 10, compared to 4.72 per cent a week ago, making it the highest rise in a year. The higher than expected rate sent government bond yields to a new four-year high—the yield on the benchmark 10-year bond rose six basis points to hit 8.19 per cent. Even the Consumer Price Index for urban non-manual employees touched 6 per cent in May, but both these indices are very imperfect measures of inflation on the ground since both work with a lag. There is an effort to broadbase the WPI by more than doubling its list of commodities from 435 and make it more current but that will take some time.

To bottle the price genie, the government banned export of a few commodities, including pulses, and allowed duty-free import of wheat and sugar—some 2.2 million tonnes (mt) of wheat will be imported—but these measures only affected traders sitting with large stocks. The damage to the consumer had already been done. Also, the import decision may not cause a significant dip in prices in many commodities where India is a leading consumer as its decision to trade sets global price trends. For instance, the world pulses market is thin and higher imports by India will not lead to lower prices. In the case of edible oil, 4 mt of which is our average annual import, the market would factor in Indian demand. Even in sugar, where Indian imports are erratic and the world market is tight due to rising energy prices (sugar is base for ethanol, a biofuel), prices are not exactly set to tumble.

Advertisement

Outlook Newsletters

Advertisement
Advertisement
Advertisement

Read More from Outlook

How Parag Agrawal Obsessively Focused On Controlling Hate Speech As Twitter CTO

How Parag Agrawal Obsessively Focused On Controlling Hate Speech As Twitter CTO

After taking over as CTO of Twitter, Parag Agrawal’s main focus was on using AI and ML to identify hate speech and bots that were used to spread misinformation through the microblogging site.

'Omicron Virus' Or 'South Africa Variant'? Here's What Not To Call New Covid-19 Strain

'Omicron Virus' Or 'South Africa Variant'? Here's What Not To Call New Covid-19 Strain

The Omicron variant of Covid-19 has led to several discussions on WHO's method of naming virus variants on Greek alphabets. But terms like 'South Africa virus' have remained in use.

IPL 2022 Retention: Who Stays And Who Goes - Full List

IPL 2022 Retention: Who Stays And Who Goes - Full List

IPL Retention list was replete with full of expected names but there were some big omissions too. The mega auction will have a massive pool of stars that teams can now choose from.

Kashmir: Why Is BJP Predicting Doomsday For J&K 2 Years After Article 370 Abrogation

Kashmir: Why Is BJP Predicting Doomsday For J&K 2 Years After Article 370 Abrogation

The statement, issued by senior BJP leader of J&K Ashwani Kumar Chrungoo, raises concern for minorities living in Kashmir Valley.

Advertisement