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According to the Ministry of Commerce and Industries, the wholesale price index (WPI), a measure of the inflation rate in the wholesale markets, rose to 13.11 per cent in February 2022
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April is one of the busiest months for almost everyone in rural areas of the Sirmaur district in Himachal Pradesh as wheat harvesting has started.
For Rita Devi, the work is hectic as she has to cook for her family and complete daily household chores after that, she goes to the wheat field to harvest the crop. This cycle continues for 6-10 days.
However, amid the hectic work, Devi is worried as inflation has skyrocketed in India.
"My day starts at 5 AM in the morning and I finish my work in the house and then we go to the field. Everything was going well a few months ago. However, now our major concern is continuous inflation. As we all know about the hike in fuel price, we will have to pay extra for wheat threshing. We do not earn much, we are not able to sell the wheat as the quantity of the crop is too low."
Her husband works as a daily wage worker at Dakpathar, a small hill town in the Dehradun district of Uttarakhand. The working site is on the Uttarakhand- Himachal border. He walks around 10 KM to reach the site and works from morning to night.
He had to take leave where he works as a daily labourer so he can also be involved in crop harvesting.
Rita Devi indulged in her daily chores, district- Sirmaur (HP) | Picture: Abhishek Sharma/BW Businessworld
"My husband hardly earns Rs 10,000 to Rs 12,000. When he doesn't go to work, they deduct the money from his monthly salary. Inflation is crushing us. Edible oil prices have gone to Rs 200 and other items like vegetables and cereals are expensive too."
The concern for Devi and her family along with many others is not over yet. According to the Ministry of Commerce and Industries, the wholesale price index (WPI), a measure of the inflation rate in the wholesale markets, rose to 13.11 per cent in February 2022.
The consumer price index (CPI) inflation rate increased to 6.07 per cent in February from 6.01 per cent in the previous month, driven by fuel, footwear, clothing, food and beverages and clothing, according to the statistics department data.
Food and beverages rose to a 15-month high of 5.85 per cent as vegetables and edible oils saw high inflation. "The price of edible oil is Rs 200 per litre, which is a major issue for common people like us. Many are now hesitating to purchase extra items and cutting them out of daily needs," said Devi.
Also, the retail inflation rate in the country reached an eight-month high and remained above the upper limit of the RBI's comfort level of 6 per cent for the second consecutive month. Apart from that, the wholesale price inflation rate remained in double digits for the eleventh consecutive month.
"Earlier, Corona ruined everything, then we thought it was over, but now the prices of essential things are going up so high. What should I do? My son who is around 22 years old is working. I want to educate my daughters, but things are getting worse and worse. My son had to leave his studies and had to do a job for survival," said Urmila, a widow in her 40s from a remote village in the Sirmaur district.
Urmila said that we get essentials from the government-regulated shop, however, it is not enough for one month. We just want to live a normal life, where things are less complicated and challenging.
Normally, international politics and development don't take place in rural areas, as it is only restricted to national and regional ones. However, currently, most of them are aware of the crisis intensifying in Ukraine due to the Russian invasion.
“Last month, few products were expensive, however, as suddenly vegetables and other essential items are witnessing price rise with each passing day. Because war is not ending, the rates of several commodities and goods have increased in Himachal Pradesh and this is giving people, especially rural households a tough time," said Subhash (husband of Rita Devi).
The increase in oil prices is going to impact the freight movement and lead to price hikes in the food items like fruits, vegetables, pulses, oil, etc. If inflation increases in India, it will go beyond the Reserve Bank of India (RBI) estimated figures and the country's central bank will then be forced to increase the rates, experts told BW Businessworld earlier.
"Yes, inflation will stay high in the near term, likely obliging the RBI to raise rates sooner unless the government cuts excise duties on petrol and diesel. So, while oil-related inflation will spurt upwards in the near term, inflation is likely to recede substantially in the August-December period, reducing pressure for further rate hikes from the RBI," said Prasenjit K Basu, Chief Economist, ICICI Securities earlier.
In the MPC announcement on April 8, RBI Governor Shaktikanta Das said that the February 2022 meeting of the MPC had projected a moderating path for inflation from 2022-to 23. Heightened geopolitical tensions since end-February have, however, upended the earlier narrative and considerably clouded the inflation outlook for the year.
"On the food price front, a likely record Rabi harvest would help to keep domestic prices of cereals and pulses in check. Global factors such as the loss of wheat supply from the Black Sea region and the unprecedented high international prices of wheat could, however, put a floor under domestic wheat prices," Das said.
Das explained that edible oil price pressures are likely to remain elevated in the near term due to export restrictions by key producers as well as loss of supply from the Black Sea region. Feed cost pressures could continue due to global supply shortages, which could also have a spillover impact on poultry, milk and dairy product prices.
According to the experts, rural consumption is shifting due to price inflation because of the war in Ukraine and the Russian invasion.
"There's been a strong increase in prices of oils that sees the contribution of low price point packs in commodities spike up by double digits. This price increase in oils will lead to an increase in cost structures of many other consumer products where it is also a key ingredient," said Akshay D'Souza, Chief of Growth and Insights, Bizom, a retail intelligence platform.
D'Souza added that this has led to consumers looking to rationalize their household spending by reducing usage and managing their current spending by buying lower price point packs.
"The Ukraine war had a significant impact on the FMCG sector. The cost of raw materials has risen as a result of the war. Furthermore, fuel prices have risen rapidly and steadily. For Supplement Sack, mayonnaise is the main product that has suffered as a result of the war. It is due to the fact that sunflower oil is the primary raw material in the product," said Manish Yadav, CEO, Supplement Sack.
Yadav said that Ukraine and Russia supply a large portion of sunflower oil to India. Both countries are at war and have suspended all exports, including sunflower oil. As a result, suppliers have taken a significant hit. Overall margin costs for a large portion of our products have increased by 2-4 per cent, but we have not yet passed this on to customers.
"Commodity prices have seen the biggest increase in low pack contribution driven by a sharp spike in almost all cooking oils. The Bizom price track indicates that prices of sunflower oil, vanaspati and mustard oil remain over 50 per cent higher than pre-Covid days and this has forced consumers to rationalize current cash outflow towards shorter duration packs," said D'Souza.
Omkar Singh, a 40 years old farmer, who lives in the Shivpur area of district Sirmaur said that it is very difficult for people in rural areas to cope with all these difficulties.
Singh, who is like other farmers' of the same area who are dependent on sugarcane and wheat, said that the prices of daily essentials are going up. Government should do anything to curb the ongoing inflation, otherwise, it will be disastrous for poor people.
Farmers harvesting wheat crop on a sunny morning, district- Sirmaur (HP) | Picture: Abhishek Sharma/BW Businessworld
"As the war drags on, with no sign of an end in sight, raw material prices will rise further, putting a damper on rural household consumption of FMCG products," said Yadav.
Experts believe that the continuation of war can result in the extra rationalisation of usage, mainly for discretionary products leading to further pressure on volumes.
"The continuous increase in prices of consumer products especially iconic food brands like parle-g, Maggi etc could put additional pressure on consumers' affordability, especially those who rely on these products for their daily meals," added D'Souza.
India’s Agricultural Exports:
Exports of agricultural products (including marine and plantation products) for the year 2021-22 have crossed USD 50 billion, the highest level ever achieved for agriculture exports, said the Ministry of Commerce and Industry on Monday.
An empty field of wheat crop in a remote village, district- Sirmaur (HP) | Picture: Abhishek Sharma/BW Businessworld
As per the provisional figures released by DGCI&S, the agricultural exports have grown by 19.92 per cent during 2021-22 to touch USD 50.21 billion as compared to the 17.66 per cent growth of USD 41.87 billion, in 2020-21.
According to the ministry, the highest ever exports have been achieved for staples like rice (USD 9.65 billion), wheat (USD 2.19 billion), sugar (USD (4.6 billion) and other cereals (USD 1.08 billion).
Wheat has recorded an unprecedented growth of more than 273 per cent, jumping nearly four-fold from USD 568 million in 2020-21 to touch close to USD 2119 million in 2021-22.
An increase in exports of these products has benefited farmers in states like Punjab, Haryana, Uttar Pradesh, Bihar, West Bengal, Chhattisgarh, Madhya Pradesh, Telangana, Andhra Pradesh, Maharashtra etc. India has captured nearly 50 per cent of the world's market for rice.