Coronavirus-led lockdown | Prices of essentials spike amid a supply crunch

The continuous supply crunch that started right from the first phase of the lockdown due to restrictions imposed to prevent the spread of novel coronavirus, or COVID-19, has prompted kirana stores to charge higher for unbranded essentials.

Kirana stores are charging almost 30-35 percent extra than the actual price for essentials items such as wheat flour, besan flour, lentils, pulses and rice.

For instance, 1 kg packet of unbranded wheat flour, which normally costs Rs 60, is being sold at Rs 90. Similarly, a 1 kg packet of unbranded kidney beans, which costs Rs 100, is being sold for Rs 135-140.

Kirana store owners claim that supply crunch due to lockdown has forced them to procure the essentials from other sellers, who are also charging them 20-30 percent higher than the normal rate.

"We ourselves have to pay higher for prices for pulses, daals (lentils) and rice so are forced to charge higher to customers. Suppliers are charging us around 20-30 percent more," said Ramesh Chheda, a kirana shop owner at Pedder Road in Mumbai, who has been running the shop for the last 30 years.

Another store owner Damji Gala at Kemps Corner in Mumbai said, "In the first week of lockdown, we had exhausted our stock of essentials. A lot of the times, we had to refuse customers due to non-availability. But then we had no option but to buy from other suppliers as regular salesman have stopped visiting for replenishment of supply of essentials due to the lockdown."

Generally, distributors or salesman service kirana stores. But due to the lockdown, they have stopped visiting shops for replenshing stocks, in turn hitting supply.

At the same time, voices in the pulses and grain industry said that higher prices are not justified.

“Earlier logistics was an issue, but now everything is normal. I strongly feel kirana stores are capitalising on the higher demand for essentials. There is ample supply of essentials. I request the government to ask for invoices for those who are charging extra,” Bimal Kothari, Vice Chairman, India Pulses and Grain Association (IPGA), told Moneycontrol.

In fact, Kothari said the price of daal and pulses have come down. He said one packet of chana which was earlier available for Rs 47/kg has now fallen to Rs 42/kg.

Recently, Nielsen India had said that stock replenishment and lack of manpower were key challenges amid the lockdown for FMCG retailers.

Retailers were facing severe constraints of stock replenishment as visits by company salespersons were severely hit. In early April, from an average of 10 visits in a week, retailers witnessed only two visits during the lockdown period.

In a recent survey conducted by FMCG research firm, Nielsen India, around 15 percent of consumers found essentials such as atta, rice, pulses, oil and ghee.