However, even though inflationary pressure based on consumer prices has eased recently at the macroeconomic level, it is still high enough to hurt the financial health of any middle-class Indian family.
Notably, CPI-indexed inflation fell to 6 percent, which is in the comfort zone of the Reserve Bank of India.
But some items of the CPI as well as wholesale price inflation (WPI) have shown a drastic increase as the prices of transportation fuels.
Significantly, any increase in fuel costs pushes up the prices of almost all essentials due to a second round effect. An increase in fuel prices generally has an impact on overall freight and transportation costs.
Rahul Kumar, 28, who commutes to work in Noida on his two-wheeler, says rising gasoline prices are draining his monthly income rather than helping him accumulate his savings.
“The rise in oil prices to over Rs 100 per liter, tomatoes to Rs 80 per kg, in addition to constantly increasing rents, could not have come at a worse time since we are already suffering from wage cuts” , did he declare.
“The high gasoline expenses due to the sky-high prices are draining my income. There have been no savings or investments for at least two years.”
Likewise, Chabilal Das, a middle-aged daily supplier in Noida, has also expressed concerns about rising prices.
“My income has dropped dramatically after the pandemic as many people working in the formal sectors have returned to the city because they have options to work from home. These are my target customers. How am I going to pay my IMEs now, c ‘has now become my biggest headache,’ Das said.
Delhi-based taxi driver Anil Kumar, 40, said rising fuel prices had hurt his cost-income margins.
“Rising fuel prices hurt us the most as we have to pay the IMEs on our auto loans, which is becoming difficult due to declining real incomes. This pandemic has hit us hard,” Kumar said.
In addition, soaring commodity prices have generally inflated the cost of manufactured goods, hurting margins as well as end users.
Suman Chowdhury, Analysis Director of Acuite Ratings and Research, said: “Certain categories in the food basket have experienced increased inflation in the current year, including edible oil, eggs, meat. , fish and legumes. In addition, the sharp rise in gasoline and diesel prices has also increased household spending as the economy unlocks. “
However, it should be mentioned that the higher retail fuel prices have been offset to some extent, as many salaried employees still have the option of working from home. In the future, there is a risk that, then as the economy continues to unblock and the demand for intensive contact services such as hospitality and recreation increases, service inflation may increase. “
Chowdhury sees India’s headline inflation at 5.5 percent for the full fiscal year 22, and 6 percent in particular for Q4FY22.
AMRG and Associates senior partner, Rajat Mohan, said: “The negative effects include hindering purchasing power, increasing inequalities in income distribution, this has a negative impact on the income of people. export as export prices increase; resulting in lower foreign demand, high long-term interest rates and reduced savings rate. “
“The energy sector, the food processing sector, the goods and raw materials sector, the automotive industries, the real estate sector are constantly agitated with inflation predisposing middle-class families to the crisis. financial and instability. “