Assocham study flags supply issues for high vegetable prices

The industry body also found the gap between inflation based on WPI and CPI widening, pointing to supply chain inefficiency

The drop in wholesale prices of essential vegetables in 2014-15 compared with the previous year did not reflect in the retail segment, which rose sharply during the period, according to a study by Assocham.

The industry body also found the gap between inflation based on the Wholesale Price Index (WPI) and that of the Consumer Price Index (CPI) widening, pointing to supply chain inefficiency.

On an average, vegetables are retailing at 49.2 per cent more than the wholesale figure. In the last quarter of 2014-15, the prices even overshoot the average of 2014-15, the study found.

"Take, for instance, onion, where prices dropped by a good 32 per cent in 2014-15 over the previous year in wholesale mandis, but in the retail market these are sold at 28.9 per cent higher. Likewise, retail prices of other vegetables moved in the contrarian direction to their price tags in wholesale markets," Assocham added.

According to the industry body, ginger prices rose 16.4 per cent at the retail level after dropping over 18 per cent at the wholesale market.

"Our research clearly points to inefficiencies and extra layers of supply chain that add to avoidable costs at the retail level. The use of modern supply chain managed by organised firms but involving local vendors is the key to structural changes that are required to deal with the issue of inflation," Assocham Secretary General D S Rawat said.