After cash crunch comes price rise

Hyderabad: The demonetisation of Rs 500 and Rs 1,000 notes has increased the demand-supply gap in retail markets leading to escalation of prices of essential commodities. Supplies from wholesale markets to retailers came to a halt, following wholesalers refusing to accept old currency notes from retailers and stopping supplies.

Prices of essential commodities have increased up to 30 per cent since the last five days with major impact being felt on prices of rice, pulses, sugar and salt. Retailers are struggling to obtain new currency notes due to currency shortage at banks and long queues. The price rise is amid the festive and marriage season. With Karthika Purnima and ongoing Karthika Masam, there is huge demand for essential commodities in retail markets, especially oil, sugar and pulses.

“This is a strange situation. There are abundant stocks available at wholesale markets in city but retail shops are facing severe shortage of stocks. Whatever stocks we had with us prior to November 8 got exhausted due to festive demand. We could not procure fresh stocks from wholesalers due to currency crisis. Whole-salers are refusing to accept old currency tendered by us and have stopped supplies,” said P. Venugopal, secretary of Retail Traders Association.

The association is worried over small retail traders suffering huge losses during the peak festive season. “Karthika Masam is considered to be our peak business season. We as small retailers cater to the needs of people from middle and lower income groups. We give credit facility to buyers who make good purchases during this season. But all this has become a thing of the past due to currency crisis. Our business got stuck between banks and wholesalers. We have currency which is of no use and banks are not in a position to disburse cash from our accounts due to shortage,” said K.Nagaiah Shetty, a retailer in Himayathnagar.