Inflation spoils common man's palate in 2010

The inflation devil returned to haunt the government struggling to steer the country towards a high growth trajectory, but most of all higher prices of edibles ranging from egg to milk and fruits to onions in 2010 ruined even the most unrefined palate.

The severity of inflation could be gauged only when the prices of onion, which shot up to Rs70-80 a kg, is juxtaposed with the average daily wages of India's nearly 300 million informal sector workers -- Rs100.

Though statistically, onion and garlic prices account for only a small percentage of total inflation (0.177 and 0.06%), the question roiling the common man would be -- what is the use of declining inflation numbers, if one cannot get a commodity as essential as onion at an affordable price.

Prices of some bulb vegetables -- onion and garlic --went through the roof towards the end of 2010, spoiling all the gung-ho about moderating inflation and self-pat on the back by the government for controlling prices.

Incidentally, the news of onion prices skyrocketing to Rs70-80 a kg in retail markets came at a time when prime minister exuded confidence that inflation will come down to 5.5% by March end from 7.48% in November.

Onions turned extremely costlier due to damage of crops in Maharashtra because of unseasonal rains and hoarding.

With government swinging into action by banning onion exports and removing customs and countervailing duties on the commodity, the prices calmed down to Rs40-50 a kg, but garlic prices flared up and are ruling at about Rs300 a kg.

Though statistically, onion and garlic prices form only small percentage of total inflation (0.177 and 0.06%), the common man is going to ask -- what is the use of declining inflation numbers, if he cannot get as essential a commodity as onion at affordable price.

The extent of high prices could also be gauged from the fact that the Union Government has recently proposed minimum wage of Rs100 for unskilled workers. Suppose these workers get this much wage only, much of it would be shelled out in buying onions, garlic, tomatoes, whose prices also rose to Rs35-40 a kg.

Similarly, rural folks get at least Rs100 a day with a minimum guarantee of work for 100 days a year under the UPA's flagship programme NREGA.

High onion prices has played a role in the defeat of Janata Party in the 1980 general elections and the rout of BJP in the Delhi assembly elections in 1998.

As of December 18, food inflation was at a high of 14.44%.

The decline in headline inflation to 7.48% in November from its peak of over 11% earlier this year, however, brings no respite to the government or the RBI given the uncertainty over future prices, particularly global oil rates.