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Tomato to fuel: Inflation batters India’s middle class

Tomato to fuel: Inflation batters India's middle class

New Delhi, Nov 25 (SocialNews.XYZ) From daily essentials like tomatoes, milk as well as edible oils to transport fuels, rising prices have hampered the financial health of ordinary middle class families in India.

The trend has not only hurt the economically weaker section of the society but has lately been cited to impact the savings rate of the well-off. The biggest impact of inflation is that it affects the purchasing power of the fixed income groups as they can buy less compared to what they were buying earlier.

 

However, even as consumer price-based inflationary pressure has eased lately on a macro level, it is still high enough to hamper the financial health of any middle class Indian family.

Notably, the CPI-indexed inflation has come down to 6 per cent which is in the comfort zone of the Reserve Bank of India.

But some items of CPI as well as wholesale price inflation (WPI) have shown a drastic increase such as transport fuel prices.

Significantly, any rise in fuel costs bumps-up prices of nearly all the essential items because of a second-round effect. A rise in fuel rates typically impacts overall freight and transportation costs.

Rahul Kumar, 28, who commutes to work in Noida on his two-wheeler, says that the rise in petrol prices exhausts his monthly income rather help him accumulate his savings.

"The rise in petrol prices to above Rs 100 per litre, of tomatoes at Rs 80 per kg, besides ever rising rents could not have come at a worse time since we are already having pay cuts," he said.

"The high spend on petrol due to exorbitant prices itself depletes my income. There has been no savings or investments for at least the last two years."

Similarly, Chabilal Das, a middle-aged daily essential supplier in Noida, also expressed concerns about the rise in prices.

"My income has gone down drastically post pandemic as many few people working in formal sectors have returned to the city as they have work from home options. They are my target customers. How will I pay my EMIs now, that has now become my biggest headache," Das said.

Anil Kumar, 40, a Delhi-based cab driver, said rising fuel prices have hurt his cost-to-income margins.

"Rising fuel prices have hurt us the most as we need to pay EMIs of our vehicle loans, which becomes difficult due to a fall in real income. This pandemic has hit us hard," Kumar said.

Besides, a spike in commodity prices globally inflated the manufactured goods' cost thereby hurting margins along with end users.

Acuite Ratings and Research's Chief Analytical Officer Suman Chowdhury said: "Some categories in the food basket have seen heightened inflation in the current year which includes edible oil, egg, meat and fish and pulses. Further, the sharply increased prices of petrol and diesel have also increased household expenditures with the unlocking of the economy."

"However, it needs to be mentioned that the higher retail fuel prices have got offset to an extent as many salaried employees still have the flexibility to work from home. Going ahead, there is a risk that as the economy continues to unlock and demand for contact intensive services such as hospitality and leisure increases, the inflation in services may see a surge."

Chowdhury sees India's headline inflation at 5.5 per cent for overall FY22 fiscal, and at 6 per cent in particular for Q4FY22.

AMRG and Associates Senior Partner Rajat Mohan said: "The negative effects include impeding purchasing power, inequality in income distribution increases, it negatively impacts the export income as the export prices increases; leading to falling in foreign demand, elevated interest rates in the long run and reduction in the savings rate."

"The energy sector, food processing sector, goods and commodities sector, automobile industries, real estate sector continuously agitate with inflation predisposing middle-class families to financial crisis and instability."

Source: IANS

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Tomato to fuel: Inflation batters India's middle class

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