Small cities foot huge food bills

Prices of some food items have been climbing higher in smaller cities compared to bigger ones, and Mumbai residents pay some of the highest food prices in the country, five-year data from the government's Price Monitoring Cell show.

Prices of some food items have been climbing higher in smaller cities compared to bigger ones, and Mumbai residents pay some of the highest food prices in the country, five-year data from the government's Price Monitoring Cell show.

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The data also suggest that fast-track farm programmes, such as the one for pulses, did help stabilise prices of lentils, the single biggest driver of food inflation during the 2008-09 spike. Yet, overall, food prices in the last three years have risen faster than average Indians' earnings, causing incomes to shrink.

According to an April to June 2011 survey by the Associated Chambers of Commerce and Industry of India (AssoCham), prices of fruits and vegetables rose between 100% and 115% in seven cities, while incomes and wages increased just 10-15% over the last three years.

This has reduced purchasing power of ordinary Indians, according to DS Rawat, secretary general of AssoCham. Fixed-income groups like salaried people are the most affected, as price rise erodes their real income.

Commodities that continued on a nose-up trend in the past one year include milk, rice, edible oils, potato and onion in the four metropolitan cities of Delhi, Mumbai, Kolkata and Chennai, while pulses prices have declined.

According to the commerce ministry's inflation figures released on Thursday, an index measuring wholesale prices of farm products rose 10.05% in the week ended August 20 from a year earlier, quickening to a four-month high. Combined with a fuel-price index increase of 12.55%, ordinary Indians are feeling a tight pinch.

Smaller cities are often the ones quietly witnessing some of the sharpest price spikes (see box). Patna saw rice prices rise by 28%, while potato prices in Guwahati have jumped 50% over the last one year.

However, the declining trend in key lentils show that India can moderate prices by funding special agriculture programmes. In order to accelerate pulses production, the government had launched the 'Accelerated Pulses Production Programme' in 458 districts in 2010. This saw tur prices fall between 4-8% this year in seven cities.