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Are prices falling? People talk about the real story

Last updated on: January 16, 2012 14:45 IST
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Are prices falling? People talk about the real story

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Rediff Business Desk

After years of high food prices, India is now witnessing a deflation, according to the government's food inflation data.

The wholesale price-based food inflation fell to -.36 per cent during the week ended December 24 as a number of items witnessing a decline in prices and deceleration in the rate of price rise in others.

But do these numbers give a true picture of the state of affairs?

How has inflation pinched the common people?

Let's hear it from them...

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Image: India sees deflation.

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Krishna Prasad Belur
Retired personnel

I have started re-drawing a tight budget, wherein I prioritise my essential needs and forego or postpone other stuff.

For instance, I have cut down on eating out; I travel by bus, as much as possible. Basically, with the price hike I am putting up with all the inconvenience.

Also, I would like to point that by just producing a "theoretical" figure and showing negative food inflation in isolation is a fallacy.

Honestly, I haven't really seen any drop in prices. There are several other inputs which are equally essential for our welfare, which the government must consider. In fact, in due course, many of these will affect the food prices:

  •  We have lost count of the number of times we've had fuel price hikes, during the same period from 2004-2005. Taking this factor alone, if we have to believe the Finance Minister, there should have been a substantial reduction in fuel prices.
  • The negative inflation should have resulted in a drop in prices of essential commodities at the shops, which has not happened. 
  •  Soon, we will have to forget about eating out in restaurants. Even smaller fast food joints have progressively hiked prices.

Inflation has also affected my savings pattern and my savings have dwindled.

With time, I can only say that it is as clear as daylight that the timely drop in prices figures released by the government is 'unreal'.

In fact, it is totally misleading and the worst is yet to come and I don't see any relief from inflation in future. 


Image: Krishna Prasad Belur.

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Aanchal Sood
Owner RelyAble Consultants

The government's inflation data shows a drop in prices but the soaring prices of essential commodities contradict it!

I do not see a major drop in prices. I think the government's figures are just a statistical respite and there is no clarity on prices in the long term.

My savings have definitely been affected, what we could buy at a lesser price is now available at a much higher price.

Money is losing its purchasing power.

Since the consumption of the essential commodities cannot be changed, the other expenses and savings are bearing the brunt of inflation.

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Image: Aanchal Sood.

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Kamal Sikder
Small scale businessman and stock market investor

Food prices are falling, say the latest government data.

After many years, inflation has gone into negative.

The question is, should we be overjoyed?

As a businessman, I am not too sure.

The prices of vegetables and other food items have indeed decreased over the past few weeks.

But our livelihood does not depend on them only.

Other aspects of the economy have to be taken into account as well.

Deflation leads to a lower level of demand in the economy.

It increases the real value of money. It also increases unemployment.

The main effect of deflation is that it gives people a huge incentive not to buy goods.

Therefore, for someone like me, deflation is a cause for concern.

The only good part about negative inflation is that it gives people an incentive to save money.

However, during deflation, as fewer people buy, manufacturers are left with excess inventory.

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Image: Kamal Sikder.
Photographs: Dipak Chakraborty
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Sabarinath Nair
Technology Marketing professional


The government's figures show a drop in prices, may be due to a wrong base-index.

Practically, I do not find any reduction in food prices since the last few years.

The monthly spending on food and provisions has risen steadily.

Eating out has become much costlier – the price of say, an Idli, has more than doubled from the 2005-06 prices.

Overall, I feel that prices have increased on an average.

Certain essential commodities whose prices had risen astronomically may have fallen marginally,
but still remain high compared to average prices in previous years.

We have cut down eating out. Salary hikes have been at par with inflation, so thankfully there is no reduction in savings.

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Image: Sabarinath Nair.

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Navnit Belur
IT professional
 

Honestly, I don't think of "coping" with inflation as much as the average consumer. 

The hike in prices of food and other items doesn't affect me as much as they could for the average user.

The only significant hike that affects me is that of fuel prices. Nowadays, I use the public transport much more than before.  

Even if the inflation doesn't affect me on a daily basis, I still realise that the price of food is only rising.

For instance, the food prices at restaurants are only increasing. And once the prices are up, they don't go down even if the price of vegetables and other produce falls.

Overall, inflation does affect purchase pattern as there is definitely lesser value for spending money.

So you start to weigh options while shopping. In terms of savings, it hasn't affected me as much, but that's only because my savings are fixed.

However, I believe that this is only the beginning. Looking at recent trends I feel the worst is yet to come. Any alleged drop in rates is not perceived.

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Image: Navnit Belur.

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Sachin Jante
Media Professional

I am coping with inflation by changing my shopping habits without compromising on taste.

I have started looking for cheaper alternatives for certain products. Most importantly, I have started to distinguish my needs from wants.

The word inflation does bring about some distress in our lives.  Ironically, the old high inflation figure has affected my life in positive way.

It's true that no one likes to curb the natural instincts, but in these times some thought and planning with regards to financial is a welcome move.

The high inflation figures made me realise that I am going to need more money to meet future risks, which to some extent can be addressed by a good long term investment strategy, as a result of which I have started building portfolio.

And, the new figures released by the government on low inflation is unlikely to affect my investment planning.

I don't think the inflation rates can be manipulated by the government. I do believe these figures are real.

However, instead of worrying about our finances, we must try and look at any negative news on the economic front as an opportunity for corrections and long term strategy.

This is a practice that I believe both the government and common man should follow.

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Image: Sachin Jante.

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Sumita Halder
Baby-sitter

I am not too educated. Have only studied till Class VI.

I started working as a housemaid when I was 16.

Now, through years of hard work, I have earned a small 'promotion' -- from housemaid, I am now a baby-sitter, an 'elite' so to say, amid  the working class.

Now, I get to watch the television at times and read the newspapers.

I heard the other day that prices of food and vegetables are decreasing.

Nothing was more surprising to my ears.

If prices were actually on their way down, why am I not seeing its reflection on my family income.

Things seem as difficult as before.

Nothing has improved.

Prices of onions, I found out the other day, are slightly lower.

But that just isn't enough.

What about the bus fares, house rents and other household expenses?

Prices of everything are going through the roof.

Yet the government is singing a different tune altogether.

But I am sorry to say, I cannot dance to that tune.

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Image: Sumita Halder.


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Kanav Aggarwal
Director, Aggarwal Holidays

Is food inflation really at a 6-year low? I feel the data collection and publishing agency is also feeling the election pressure.

The figures do not give a clear picture of the actual state of inflation and they are just an eye-wash.

The prices of all essential commodities has been growing all across the table.

Even if the inflation figures show that it has come down, the actual market prices are different. 

The best way to cope with inflation is to work hard and earn more. This is one thing nobody can escape from.

One can survive only with more earning as the rate of inflation is increasing at a much faster rate than the earning. 

The situation is so difficult today. Even coping with daily expenses is an uphill task so saving remains a dream.

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Image: Kanav Aggarwal.


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Purnima Bairagi
Housemaid

Ki bolccho didi, jinisher dam naki komchhe? Ato obastob kotha ami kokhono shunini (What! Prices of food items are decreasing? I am yet to hear something more unreal).

"I work in three houses as a part-time maid and earn about Rs 3,500 a month.

Ei  samanyo takaye songsar chalabo ki kore sei bhebei din raat kaate (Having to keep the kitchen stove burning with a paltry monthly earning of Rs 3,500, makes me lose sleep)"

If prices were genuinely falling, I would have managed to save much more.

But that's not the case.

I am still as poor as before.

There is hardly any savings.

The vegetable prices may have gone down slightly but that has not reflected on my family's condition.

My husband and I are still struggling to keep things running at home.

Yet I get to hear that government is publicising that inflation is down.

It's a crazy government really, run by jokers, rich ones that too.

This country has no room for the poor like me.

We will strive till the last day of our lives.

And one fine morning, we will die of either poverty or starvation while the bureacrats would be busy calculating how far did the inflation fall.

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Image: Purnima Bairagi.

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Tarunjeet Rattan
Media Professional

Inflation to me means lesser night outs or binging at restaurants and tighter household budgets.

It is affecting all of us in real terms. My family and I had to make changes in our lifestyle to accommodate the price hike.

For instance, my family loves eating out, but after seeing the way the prices on the restaurant menus have shot up, we find it difficult to enjoy a night out.

Earlier, we used to go out once in a couple of days. Now it's just once in a couple of weeks.

Even if the government keeps releasing new figures indicating drop in prices, I haven't really seen a drop in food or vegetable prices.

Further, the inflation has also affected my savings pattern. I have to plan and budget more carefully now. Now, the buck also doesn't seem to last so long.

I think these rising costs will most definitely affect the way we shop and where we shop and the kind of products we buy.

For instance, I had to bring in some significant changes in my purchase pattern. I have gone from shopping at high-end stores like Nilgiris (in Bangalore) and Hyper City to my local vegetable vendor.

I have changed from packaged Tropicana to Rasna where I get more value for money.

I firmly believe that inflation is here to stay and the government seems to be prepping us for another raise. Once the prices are raised it rarely goes down to its original price in the market place.

There is a lot of noise and protest when prices are raised. But, the outcome is always the same. One of the main effects of these protests is that the government will be brought down.

Then, the next government will take charge. For sometime, we will see a relief in price rise. Eventually, it is back to the same thing - price hike! Isn't it? Take the case of onion price rise.  

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Image: Tarunjeet Rattan.

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Bapi Kundu
Driver

Prices of food items are falling? You must be joking!

I earn about Rs 5,000 a month. A year back, I used to be left with Rs 200 a month after meeting all the expenses.

Now, I am left with no money at the end of the month.

Therefore, how can I say that prices are falling?

Vegetable prices may have decreased only slightly but that does not reflect on my family income.

Everyday is a struggle for me.

With such a meagre income, I don't know how to pay for my children's education after paying for all other household expenses.

At times, I am unable to pay the monthly rent on time. But as my landlord is generous and lenient, he grants me enough leeway.

Our family of four reside in a 100-square foot room.

Children are grown up now. They need privacy and more space.

But I cannot think of shifting to a larger house with this income.

It would have really helped people like me if inflation went down.

I wish government claims about prices were true.

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Image: Bapi Kundu.

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D Stalin
Project director, Vanashakti

The government's claim on inflation is hollow and false. The food inflation is not low by any standards. Inflation is steadily rising.

With the prices of fuel going up so often and farmers getting a raw deal, how will the inflation come down?

The prices of vegtables has not dropped they have climbed up over 50 per cent in the past year and it is rising further.

Inflation has taken its toll on me. I have cut down on the use of my vehicle, cut down outings with my family.

Salaries have not increased, only the cost of living has gone up. So obviously my savings have taken a drastic hit.

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Image: D Stalin.

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Dr Mukhmohit Singh
Director, NIHE India

Yes, I agree with the food inflation figures. We can see a fall in the prices now. I would not say that the prices have dropped substantially but it has reduced marginally.

The best way is save is to invest in inflation proof investments.

Savings have been affected because the amount which was available earlier to save has reduced to due high prices.


Image: Mukhmohit Singh.


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