Food bill burns bigger hole

For poor households it has been a tough year trying to make ends meet as daily consumption items like rice, potatoes, tea, salt, sugar, coarse cereals, gur, pulses, coking coal and fish were significantly dearer.

The government now says there is little likelihood of prices softening in the next few months due to inadequate production after a bad monsoon, which led to a demand-supply imbalance.

But the good news is that onion prices will not invoke any tears. Onions, along with wheat, atta, some pulses, groundnut oil, kerosene and chillies are now cheaper than the same period last year. The government is also expecting cooking oil to remain affordable due to lower global prices and higher domestic production.

According to the Survey, coarse cereals, consumed by most of the rural population became more expensive because of an erratic monsoon and are expected to remain so. In 2004, total coarse grains production will be lower by almost 6 mn tonnes compared to last year.

The consumer also felt the brunt of lower potato production and the effect of the rising cost of diesel on transportation of the vegetable.

Tea has become expensive because lower production and rising demand from overseas is reducing supplies in the local markets. But it may be seen by the industry as a necessary correction since prices have been stable and unusually low over the past five years.

Similarly, sugar prices are higher due to an anticipated decrease in production and an increase in the statutory minimum price. The government has been on the backfoot over sugar prices which have risen by almost 25% in the last couple of months due to sudden dip in supplies.

The Centre was forced to intervene by releasing higher quantities of free sale sugar.