No sign of respite

THE price hike continues. The Sensitive Price Index, published weekly by the Federal Bureau of Statistics, recorded a general price hike of 26.03 percent for all income groups for the week that ended last Thursday. For the poorest income group, those living on less than Rs 3000 per month, the week recorded 29.74 percent. This income group has seen price hikes far in excess of 30 percent, the highest ever, in recent times. The Bureau computes the SPI and the CPI using a "basket of goods" approach. These indices measure not core inflation but the price hikes that consumers actually have to face. These contain items susceptible to price volatility, like food items and fuel. The Sensitive Price Index, as the name suggests, places greater numerical weight in its computation on the volatile items and is calibrated to register more movement with small price changes. This is because it is these small changes that go a long way in deciding how families throughout the country are going to be making ends meet. The lower one goes on the income scale, the greater the proportion of one's salary one spends on food items. That is the reason why a different SPI is computed for different income groups. The reason why the SPI in particular has been registering such great hikes is that the bulk of the inflation driving up general inflation has been that of food. This is a double whammy for lower income groups. It is the rise in the prices of food items in particular that they find hard to withstand. The falling costs of mobile phones or cellular services themselves, much trumpeted by the previous government, don't mean much to the great unwashed. It is precisely food inflation that shows no sign of respite. Though there is a global food crisis underway, there are some proactive steps that the current government can take to lessen the blow. And the most important of these is to take care of the crop cycle better than the previous government did. The next couple of months or so are going to be crucial.

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