KOCHI: Recently, the TNIE team met Finance Minister K N Balagopal for the Express Dialogues series at his office in Thiruvananthapuram. While we were trying to pin him down on the Rs 2/litre social security cess on petrol and diesel announced in his budget, he mentioned a valid point.
He said the prices of almost all goods and services have been going up by several times in the past two-three years, and the media was not highlighting this even while going after the government for the cess, which was meant to meet the social security pension purposes.
True, consumers have been facing the pain of price hikes for some time now — from soap to bread, rice to milk, detergent powder to shaving cream, and LPG to sugar and rice. And it’s been going unnoticed for far too long, at least in the public discourse. Consider this, manufacturers have hiked the price of a 500-gm bread pack by Rs 5 recently to Rs 45. The price of an 80-gm instant noodles pack was raised by Rs 2 to Rs 14; a 280-gm one by Rs 5 from Rs 50 to Rs 55.
The price of almost all leading brands of soap powder (500 gm) went up by Rs 5 in recent weeks. After Milma hiked the price of milk per litre by Rs 6 from December 1, its competitor PDDP followed suit. Without any public announcement, Milma, recently, hiked its half-litre blue packet price by Rs 2 (over and above the Rs 6 implemented earlier), justifying that it increased the milk quantity in this segment to 525 ml.
The price of toor dal went up by Rs 20/kg to Rs 140, and urad dal from Rs 140 to 160. The price of rice (Ponni) went up from Rs 45 to Rs 50/kg in the last month.
The prices are going northward in not just the Fast Moving Consumer Goods (FMCG) category or the groceries. A 14.2 kg domestic LPG cylinder now costs Rs 50 more. The price which was around Rs 710/cylinder in January 2021, now stands above Rs 1,100 — a 55% rise in just over three years. Mobile tariffs, DTH rates, etc. have also gone up. Even the newspapers, which have been shouting from the rooftop criticising the Rs 2 cess, have hiked the prices in the past six months or so.
The question is whether the continuous hike has impacted consumption. Balagopal said he’s not seen any major decrease in the consumption pattern, at least in Kerala, despite the across-the-board price increase. The main reason could be the continuing inflow of remittances to Kerala though there were fears earlier that it may slow down after three to four lakh expatriates returned home from the Gulf in the wake of Covid.
A key point that has not got much attention in the din is a recent statement by former RBI deputy governor Viral Acharya. Speaking at the NSE-NYU conference on Indian Financial Markets last week (as reported by a business daily), he said the pricing power of ‘Big 5’ — the Reliance Group, the Tatas, Aditya Birla Group, Adani Group and Bharti Telecom — was driving the core inflation.
I would add FMCG biggies like Hindustan Unilever, Nestlé, ITC, Procter & Gamble, and Godrej Consumer to the list, and the consumer is left with no choice but to either accept the higher price or reduce consumption. Balagopal, in his budget speech quoting a study by the Centre for Development Studies, said Kerala imported products worth around Rs 1,28,000 crore in 2021-2022.
Out of this 92% was from other states. In contrast, the state’s exports were around Rs 74,000 crore. Out of this 70% was to other states. Balagopal made the statement on February 3, the budget day.
But, after random enquiries in my neighbourhood grocery shops last week, I got a slightly different picture. According to them, there is a slowdown in the consumption of several items, including milk, and bread, compared to a couple of months ago.
RBI Governor Shaktikanta Das, who was in Kochi to deliver the 17th K P Hormis Commemorative Lecture on March 17, said the worst of inflation was behind us. For the common man, however, it looks like harsh and tough months ahead.