26 June,2011 07:08 AM IST | | Saurabh Katkurwar, Urvashi Seth, Chetna Sadadekar
The diesel and LPG price hike has had a cascading effect on almost every aspect of your life. Prepare to shell out even more money for essential items, from vegetables and milk to clothes and even restaurant food. And it's not going to get better anytime soon
Better start saving up, your pockets are going to get empty a lot faster in the coming months. The Rs 50 LPG price hike, combined with the increase in the price of diesel by Rs 3.90 per litre (including 30 per cent VAT), and kerosene by Rs 2.10 per litre (including 5 per cent VAT), is going to further push up prices of essential commodities, from milk to vegetables. This, after Mumbai just saw a three-month respite from food inflation. And eating out will not be the solution, because the cascading effect of the price rise means that increased transport costs will push up the cost of items at your favourite restaurants.
The latest is that the general body meeting of the Bombay Milk Producer's Association held on June 25 at Deewan Centre in Jogeshwari has decided to increase the price of fresh milk by Rs 3, citing the steep rise in the prices of fodder fed to buffaloes and the hike in cost of diesel, required for transportation. Milk will now cost Rs 46 per litre, including Rs 1 as a transportation charge.
Transport costs are up
The effect of the price rise is spiralling into various areas. Transporters too are set to raise freight rates by 8-9 per cent, following the diesel hike, with immediate effect on all routes across India. The impact of increase in freight rates will be visible on transportation of all kinds of goods, including perishable commodities like vegetables and industrial items.
Krishna Patil, Vice President of Agriculture Produce Market Committee (APMC), Market Transport Lorry Association, confirmed that prices of vehicle auto parts have already doubled in the last few months, which is harming transport companies' profits. To add insult to injury, the government has increased the prices of petroleum. Patil said, "This hike has left us with no option but to increase transport charges."
As a result, everyone is suffering. Prakash Prabhu, another wholesale trader at APMC market, said wholesale traders and farmers will have to bear the extra cost of the increase in transport charges. Prabhu said, "The hike will affect our business as well as that of the farmers because we cannot further increase vegetable prices, which are already soaring."
Veggies dearer by Rs 20
After a sudden price hike was noticed over the last 10 days, vegetables that feature in the regular fare of every household have been dearer by a heart-stopping 100 per cent. French beans, which were being sold for Rs 25 per kg less than a fortnight ago, are now being sold at Rs 50 per kg. Green peas have now become virtually untouchable at Rs 80 per kg. And the versatile tomato, a necessary ingredient in almost every Indian preparation, is getting steeper each day.u00a0
Skyrocketing prices are not the only problems plaguing the gourmands of the city. Off-season veggies are being sold at market places, but one is better off steering clear of them. Rajni Dalvi, a banker, said, "I bought French beans two days ago. I went home to prepare them, but found insects crawling out. We pay Rs 50 per kg, and yet we are sold vegetables that have gone bad. This is outrageous. "
And respite is not forthcoming. The prices have gone up because of untimely rains and the hike in petrol and diesel rates, claim vendors. "The matter is out of our hands. We buy the vegetables at whatever rates that are asked, and bring them to the Vashi market. After that, the distributors take over. They have to think about their profits as well," said Navnath Ingle, vegetable merchant at the APMC market. Dinesh Kumar, another wholesaler, anticipates a further, substantial increase. "We will be compelled to increase vegetable prices by 10 to 15 per cent if transport charges increase due to the hike in diesel prices," said Kumar.u00a0
It will get worse
Experts have predicted that the situation will deteriorateu00a0 further once the monsoons arrive in full swing. It appears that the agricultural schemes undertaken by the government to alleviate the farmer and common man alike have been anything but effective.
Vegetable vendors too are concerned. "During the rains, this is a common situation. I agree that the rates are higher than usual this year. I am concerned that prices could rise further," shrugged Gangaram Yadav, a vegetable vendor at Dadar market.
His worry is not unfounded. Altercations between vegetable vendors and customers are nowadays a regular feature at markets, with prices rising by the day. An enraged Aastha Dalvi, a pharmacist by profession, said, "The prices are rising only because of the greed of vendors. It is high time they stopped thinking about their own profits and started thinking about the buyers."
Pay more when you eat out
The hotel industry too, which is already reeling in the aftermath of the hike in various taxes and duties announced by the central government this April, has suffered a further blow with the hike in diesel prices.
Sudhakar Shetty, President, Indian Hotel and Restaurant Association (AHAR), confirmed that the hike in diesel prices would mean a rise in menu prices. "Vegetables prices, which were already high, will go up further, affecting the cost of making a dish. The hike might force us to raise our prices again," he rued.
The owner of a Bandra restaurant, on condition of anonymity, predicted closure for restaurants that cannot deal with the increasing inflation. "Already, we charge customers service tax on the food bill, which they complain about. The sudden rise in diesel prices means customers will avoid dining out altogether as rates on the menu might shoot up by almost 5 per cent," he admitted.
VN Prabhu, owner of New Sardar restaurant at Chinchpokli feels the hike in diesel prices will have a cascading affect on the restaurant industry. "From raw materials to transport costs, we are anticipating a rise of at least three percent," he said, adding, "Every first of the month we are forced to change our menu prices thanks to change in LPG prices for commercial users. The rise in transport cost will further impact menu prices."
Clothes will cost more too
Your clothes won't be spared either. The impact will be felt on textile industry, too say experts. All India Woolen andu00a0Textiles Association president Sanjay Jain confirmed that the rise in transportation costs is going to impact the cost of cloth. "The cost of cloth is expected to go up by almost 5 per cent in the coming days, thanks to the rise in diesel prices."
He added that the industry was already struggling to meet the rise in cotton prices and this will only add to their woes.
