Inflation spurs fair price shop sales | delhi | Hindustan Times
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Inflation spurs fair price shop sales

The rising cost of living is hurting lots of people. Surging food prices have shrunk the purchasing power of many households, prompting millions of Indians to buy up to three times or more of subsidised staples—rice and wheat—from government-run fair price shops, a new government study has shown.

delhi Updated: Jan 25, 2013 00:19 IST
Chetan Chauhan

The rising cost of living is hurting lots of people. Surging food prices have shrunk the purchasing power of many households, prompting millions of Indians to buy up to three times or more of subsidised staples—rice and wheat—from government-run fair price shops, a new government study has shown.

The National Sample Survey Office (NSSO), in its latest report on Wednesday, reported a 2.5 times jump in the sale of government-subsidised wheat in rural areas between 2004-05 and 2009-10. The sales of such wheat soared three-fold in urban areas.

The increase in case of rice was not so dramatic but was also steep.

Experts attributed the rise in sales of subsidised food grains to the growing difference between market prices and ration shop prices.

“High procurement of food grains for the public distribution system have pushed up the retail market prices,” said Pranob Sen, former economic advisor to the Planning Commission.

India’s overall consumer price inflation – which captures shop-end prices, making it a fairly realistic cost-of-living index – rose 10.56% in December—up from 9.90% in November.

High inflation has meant average middle-income Indians are cutting back on non-essential expenditure to remain afloat.

“Over the last three years, the EMI on my home loan has gone up by 25%. My monthly fuel bills have doubled. So, to ensure that we don’t default on EMIs, we have cut expenses on eating out and vacations,” said Sudhir Verma, Delhi-based independent marketing consultant.

In all, about 39% homes in rural and 20.5% in urban India were buying at least one subsidised food grain. The per capita off-take of subsidised grain has doubled during the 2004-05 to 2009-10 period.

The Reseve Bank of India ‘s (RBI) continuous monetary tightening — raising interest rates to squeeze demand, and thus, prices —has failed to tame the price monster, but it has certainly forced families to cut down on non-essential expenses.