The rise in diesel price by over 6% (around ₹5 a litre) in the State since the beginning of the New Year has already begun to have a cascading effect. The transport cost of essential commodities such as foodgrains and vegetables has shot up, and is expected to be passed on to customer soon.
“When the crude oil prices are relatively low in the international market, we don’t understand why the Union and State governments are increasing taxes and cesses on fuel. An increase of even ₹1 in diesel price will lead to inflation and burden common people,” said G.R. Shanmugappa of the Karnataka State Lorry Owners’ Association. He said the recent rally in diesel prices was already making itself felt. “Our costs are shooting up. While we will pass it on to the traders, they would eventually pass it on to the consumers,” he said.
The lorry yards at most APMC yards in the State have been witness to bargains and in some cases boycotts by transporters demanding a hike in the trip rates to accommodate diesel price rise. “At most yards, transporters are demanding a hike of ₹50 per quintal of foodgrains on every trip. As of Friday, we have negotiated it down to ₹20 per quintal of foodgrains being transported. That is already a hike of ₹0.20 per kg in the wholesale market,” said Ramesh Chandra Lahoti, chairman, APMC Committee, Federation of Karnataka Chamber of Commerce and Industry (FKCCI).
The price rise in the retail market will only add on to the hike in the wholesale market. “The fuel price hike has increased the cost price of commodities for us as the transport cost has gone up, over which we will have to accommodate our retail margin,” said Raju Sundaram, a retailer from Vidyaranyapura. Thus, the fuel price hike has already led to cost escalation at both wholesale and retail markets, which will eventually be passed on to consumers. “If there is a further hike in diesel price, transport costs will further go up, leading to inflation,” Mr. Lahoti said.
Meanwhile, vegetable prices has already started rising. “The transportation cost to take vegetables from the farm to the market has been increasing almost every day. This is obviously reflected in the price,” said G. Sannamune Gowda, a farmer from Devanahalli.
A procurement chief of a prominent retail chain attributed the rise in vegetable prices to low supply during winter, but added that the fuel price hike would make the situation worse.
( This is the second of a three-part series on the impact of the fuel price rise )