Price pressures have added to the burden of households dealing with job cuts, salary reductions and loss of income as the effect of the pandemic-induced lockdown still plays out across some sectors, despite a strong economic recovery.
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Recent data point to a hardening of both retail and wholesale price inflation rates. Retail inflation has soared to a three-month high of 5% in February, while WPI (wholesale) inflation surged to a 27-month high of 4.2% in the same month, largely led by strengthening fuel, food and manufactured product prices.
“This is really a big problem for all of us, as high prices are upsetting our monthly budget,” said Paramita Biswas, a professional singer and YouTuber in Kolkata. She said due to the pandemic, sanitisers and masks have added to expenses on health.
The retail inflation data for February showed the extent of the strengthening prices. Meat and fish prices rose an annual 11.3% in February, while egg prices shot up 11.1%. Oils and fats rose 20.8%, while pulses and products rose 12.5%. In fact, prices of mutton, which hovered at Rs 500 per kg pre-pandemic, nearly doubled during the lockdown and have remained Rs 750-800 per kg a year later.
Price of tur dal, which was around Rs 95 per kg in Delhi in April last year, has now soared to Rs 108 per kg. It is a similar story for other pulses such as urad and moong in cities such as Mumbai and Kolkata. Edible oil prices have also hardened. Mustard oil, which was selling at Rs 114 per kg in Mumbai last year, is now available for Rs 155 per kg, while sunflower, which was at Rs 105 per kg in Kolkata, is now at Rs 179 per kg.
Rising fuel costs have also added to the woes of households, although of late there has been some easing. The NDA government had been successful in managing inflationary pressures since assuming power in 2014 against the backdrop of stubbornly high prices, but the pandemic-triggered price increases have upset the cart.
Chinmoy Barik, who works as an engineer in an IT company, has been staying in Bengaluru for the last seven years with his wife, daughter and mother. He says the spike in fuel prices has hit his monthly budget majorly this year compared to last year. Though most of the year he has worked from home. “It has hit my monthly budget as savings have gone down. A lot of extra expense has been incurred due to ordering food online during the lockdown,” he said.
The surge in prices of commodities and other costs are prompting people to reduce expenses on activities such as eating out.
Rajiv Bansal, a bank employee in Mumbai, has a family of three. He continues to work from home for three days a week. Eating out has dropped substantially. He says his grocery, fruits and vegetables purchase costs have shot up not because of high prices but due to the buying of more quantity and exotic stuff. In education, there is a saving on children’s school uniform, transport and a marginal reduction in fees as extracurricular activities and field trips are not happening due to the pandemic. He has managed to re-negotiate the rent of his one-bedroom flat as several tenants in the complex had vacated and landlords were offering lower rates.
While prices of vegetables are expected to stabilise as supplies improve, overall inflationary pressure is expected to linger for now. The latest Reserve Bank of India (RBI) inflation expectation survey showed that more households expect general prices as well as inflation to increase in the next one year. This is prominent in the case of food and non-food commodities. Households also expect more pressure on price of services over the one-year horizon when compared to a one-quarter (three-month) period.
Pandemic-induced lifestyle changes are also adding to costs for some households. “Consumption of vegetables and fruits suddenly shot up since the outbreak of the pandemic as we were forced to stay indoors. Now, we have decided to cut short on those expenses. Post-lockdown, we are now taking short breaks to entertain us,” said Sumathi Jaykumar, a self-employed Chennai resident.
(Contributions by Mayur Shetty, Mamtha Asokan, Avik Das, Dipak Dash, Udit Prasanna Mukherjee and Surojit Gupta)