Prices rising faster in rural areas than urban centers – Assocham

VEGThe impact of rising prices is being felt more by people in the villages compared to those in the cities due factors including unscrupulous traders, Assocham said.

“Amidst the agriculture sector facing a crisis-like situation, distressed rural population is carrying the burden of only in food and beverages but also in a number of essential items such as clothing, household goods, health or minimum recreation activities,” the industry association said.

It conducted a study analyzing data from the consumer price index.

Inflation numbers have found that certain items that are considered unavoidable — such as food and manufactured essentials — continue to show robust price increases compared to others such as industrial inputs and discretionary consumer goods.

The study found that education and personal care products have seen much higher retail inflation in the rural markets than in cities in January, 2016 vis-à-vis the same month of the previous year.

Assocham pointed out that the CPI inflation for clothing was at 7.07 per cent in rural areas, more than 3.10 percentage points than 3.97 per cent for the urban population.

The difference for the price rise of footwear between rural and urban segments was 2.81 percentage points.

For household goods the difference between rural and urban retail inflation was 2.64 percentage points.

“The overall CPI inflation at 5.69 per cent for January, 2016 would have been lower if prices for essential goods for the rural people were similar to the urban areas. Lack of physical infrastructure, including all – weather roads, electricity add to the cost of living for the rural population. For instance, load-shedding for long hours in villages force consumers to resort to alternative and expensive sources of energy,” the paper noted.

For health services, the villagers had to bear inflation of 6.09 per cent for January, 2016 on annualized basis compared to 4.75 per cent by the city dwellers. “This is again a factor of lack of medical facilities and severe shortages of doctors and para-medical personnel in villages and towns,” ASSOCHAM Secretary General Mr D S Rawat said.

The paper noted with concern that the difference in prices of essential items between the villages and cities, going up by over three percentage points can have a bruising impact on the rural population which has battled a flat growth of 0.2 per cent in 2014-15 and estimated 1.1 per cent in the current fiscal.

For the food and beverages, the CPI inflation in villages was well over seven per cent in January while for the cities, it measured 6.23 per cent.

Yet another, paradoxically, is fuel and light which saw in the rural areas inflation of 6.67 per cent, more than double that of 3.09 in cities. “The fuel and light index is crucial from the point of view of the usage for pumping up bore-well water in larger proportion in the wake of failure of the Monsoon rains for two successive years and almost negligible winter showers this year as well,” the ASSOCHAM Paper pointed out.

It said besides the supply chain inefficiencies, the intermediaries and illegal hoarders take advantage of the situation especially when the rural population is in distress. “This calls for much more vigil on the part of the state governments with liberal help from the Centre”, the chamber said.