Letters: Price points

The corporate sector is asking for a reduction in policy rates just because the annual inflation rate based on the wholesale price index has fallen to 7.25 per cent in June 2012 from 7.55 per cent in May. It is misleading. The rate may be revised upwards later, as we have seen in the case of data for previous months. The consumer price index may reveal a worse situation. Food inflation has gone up from 10.74 per cent in May to 10.81 per cent. How does one explain the annual increase in prices of rice and wheat by 7.46 per cent and 6.82 per cent, respectively, at a time when government godowns are overflowing with stocks? Wheat prices declined in January-March and then spurted to six per cent and above from April to June, which marks the marketing season. In the past, the season used to see the trough in the price cycle that was to be expected. Is the massive procurement leading to a reduction in the quantity of floating stocks in the market causing a price rise? Vegetable prices have spurted up after reports of deficient monsoon rain. The lowly drumstick, priced at Rs 5 a piece in May, costs Rs 8 now in Mumbai! This is true of many other vegetables. The seasonal price indices of the Reserve Bank of India do not reveal any relief till November.

A Seshan Mumbai

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