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Food prices pinching poor real hard

New Delhi: While political calculations obviously played a significant role in Monday’s nationwide strike, the unprecedented price rise being cited by the opposition parties is no figment of their imagination. Food prices, in particular, have skyrocketed even going by the government’s own data, and it is the poor who are the worst affected.
    The Wholesale Price Index (WPI) for May 2010, the latest month for which data is available, shows a 10.2% increase over May 2009. More worryingly, food inflation continues to outstrip general inflation. The price of primary food articles increased by 16.5% over May last year, pulses grew by a whopping 32.4%, eggs, meat and fish by 35%, milk by 21.1%, sugar by 26%, flour by 16%, cereals by 6%, and fruits and vegetables by 7.6%.
    According to the FAO-OECD’s Agricultural Outlook 2010-19, India was one of the few countries with two-digit food inflation in 2009. Most other countries stabilized after witnessing spiralling prices in 2008. China, in fact, saw food prices grow by less than 1% in 2009 over 2008. The figures cited above pertained to wholesale prices. More relevant to the aam admi is what is happening to retail prices, more correctly reflected in the Consumer Price Indices (CPIs) which have witnessed significantly higher increases than the WPI. Since food is given a much larger weightage in the calculation of the CPIs, this is hardly surprising given the exponential increase in prices.
BITING INTO BUDGET
The bandh has not come without a reason as food prices continue to outpace general inflation
The worst hit by the soaring prices are the poor as primary food articles cost 16.5% more than their price last May
While India struggles with two-digit inflation, China saw food prices grow by less than 1% in 2009 over 2008 Food prices have risen over time
New Delhi: Rising food prices are taking away a huge slice of the common man’s budget. The Consumer Price Indices (CPI) for industrial workers rose 14.9% between February 2010 (the last month for which data is available) and February 2009, with food price inflation outpacing the general inflation at 17.3%. This is a trend that can be seen in the preceding two years as well, demonstrating the huge rise in food prices over time. The food articles and food products indices in the WPI were both roughly 34% higher in May this year than three years ago.
    The price squeeze has spared neither the urban nor the rural poor. The CPI for agricultural and rural labourers, though marginally lower than that for industrial workers in 2010 over 2009, far outpaced the CPI for industrial workers over the preceding three years. At their latest levels, both these CPIs were 37% higher than the levels in the same month in 2007.
    To get a fix on what that means for the average agricultural worker, consider this. The weight assigned to food in the CPI for agricultural labour is 69%, which indicates the proportion of the family budget spent on food. Now, when something that already accounts for almost 70% of your budget becomes 37% costlier, it effectively accounts for almost all of your income, unless the income increases commensurately.
    Since some other items of expenditure like medical costs cannot be wished away, such sustained rises in food prices mean that those at the bottom of the economic ladder have to cut their already meagre food consumption.