World Economy-Lead Kindly Light

power on price inflation depends very much on how the decline in purchasing power is distributed. Inflation in food prices cuts most sharply into the budgets of the poor, to which they respond first through substitution of grains for non-foodgrains, then there is a substitution within grains (cereals for pulses) and lastly a reduction in cereal consumption itself. When the last stage is reached there is a dampening of inflation due to sheer misery. In general, only the second stage can be discerned, i e, the stage at which there is a relative rise in cereal prices. However, is it possible that the recent price stability (since August 1982) reflects the arrival of the last stage? After three years of significant price inflation, we have had a drought this year, cutting the kharif crop by 8 to 10 per cent. In which case, what role have monetary policy and public distribution played? Probably none. The effort to claim credit for government policy is perhaps only covering a grim reality.