The Consumer Price Index (CPI), benchmark inflation measure in this part of the globe, in Jammu and Kashmir grew to 7.42 per cent in June. It is above CPI of national average of 6.26 per cent and Reserve Bank of India (RBI)’s upper tolerance limit of 6 per cent.
Nationally also, the Wholesale Price Index (WPI) has grown at 12.07% in June, the third consecutive month of double-digit wholesale inflation. This is apart from prices of fuel, which remained at record high.
Most of the people in Jammu and Kashmir, as also across India, are employed in the unorganised sector and these parameters suggest that their earnings are not indexed to prices. The rising inflation puts a squeeze on purchasing power and demand. In other words, the higher prices of goods and commodities have not only affected consumers but also resulted in less business turnover in the markets for traders.
The latest CPI, released by the Union ministry of statistics and program implementation, signifies the concern of people in Jammu and Kashmir who have been expressing concern over the skyrocketing prices of eatables, fruits and edible oil among other products.
As per RBI governor Shaktikanta Das, the inflation is a “transitory phenomenon.” However this may not be the case. Crude oil prices in International markets are expected to stay at their current levels with possibility of rise also.
While crude prices have increased significantly over the last one year, domestic taxes, especially the ones imposed by the centre and local governments, are also to blame. Union excise duties and local tax contributed to a substantial amount per litre respectively. Diesel, the main fuel for freight carriage, continues to climb to newer record highs and is bound to feed into prices of almost everything being transported across distances — from fresh produce to intermediate and finished industrial goods.
Unless the government cuts taxes, petrol-diesel prices will not come down. Their cascading effects will proliferate further. The central government needs to act on inflation before it causes more distress and wear down demand further. Otherwise it will only result in a tailwind for inflation going forward.
While measures are mainly to be undertaken by the central government, the local administration needs to act in controlling factors that are associated with malpractices by some unscrupulous traders. The local administration needs to face challenges with a lot more authority than it is showing or lacking presently.