The price of inflation

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: Food has become more expensive than before. One doesn’t have to eat out to realise that. Kitchen managers can vouch that the cost of preparing home-cooked food has become much higher. And this higher cost doesn’t arise entirely from higher prices of cooking gas. The stuff being cooked itself has become much dearer. This includes common pulses like arhar, moong, and masoor, not to mention fruits & vegetables, spices and fish. With eating at home more expensive, inflation is no longer a distant enemy.

As the wholesale price index (WPI) inches closer to 6%, familiar fears have started surfacing. With elections round the corner, there’s hardly anything more sensitive than prices that’s likely to figure prominently in the consideration set of voters. Beginning with the “onion” elections in Delhi about a decade ago, several polls have been decided by prices of essentials. As Parliamentary elections get closer, as well as those in some key states, the firmly north-bound prices contain serious scope for discomfort for the country’s political classes.

But why are prices rising? Is it because of oil? With spot prices of global crude oil crossing $100 per barrel, oil is definitely one of the drivers. But why should high oil prices increase the cost of pulses, or fruits, which are grown at home? After the recent revision of retail prices of petrol and diesel, which has more closely aligned domestic and international prices, there haven’t been any more changes in domestic petroleum prices. Then is it because people have suddenly started eating more pulses and fish? Well, pulses are not really close substitutes of rice and wheat. Irrespective of regions and incomes, they have been staple fodder for Indian households—rich or poor—down the ages. As far as fish is concerned, the outbreak of bird flu and panic culling of chickens might have seen a spurt in fish prices in West Bengal and some neighbouring states. But again, that’s not a convincing explanation for increases in fruit and vegetable prices.