SME Times is powered by   
Search News
Just in:   • Higher fiscal spending, consumption recovery lift India's Q2FY22 GDP above 8%  • Samsung unveils new auto chips for high-end cars  • Apr-Oct fiscal deficit over 36% of FY22 target  • Delhi HC order costs PSU insurance officials their Director post  • Inflation concerns 
Last updated: 25 Nov, 2021  

Inflation.9.Thmb.jpg Inflation batters India's middle class

Inflation.Down.9.jpg
   Top Stories
» Higher fiscal spending, consumption recovery lift India's Q2FY22 GDP above 8%
» Apr-Oct fiscal deficit over 36% of FY22 target
» 21.52 cr loans extended to women under Mudra Yojana
» Skill India launches programme to upskill street food vendors
» No proposal to recognise Bitcoin as currency: FM
SME Times News Bureau | 25 Nov, 2021
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."
 
Print the Page
Add to Favorite
 
Share this on :
 

Please comment on this story:
 
Subject :
Message:
(Maximum 1500 characters)  Characters left 1500
Your name:
 

 
  Customs Exchange Rates
Currency Import Export
US Dollar
66.20
64.50
UK Pound
87.50
84.65
Euro
78.25
75.65
Japanese Yen 58.85 56.85
As on 01 Dec, 2021
  Daily Poll
COVID-19 has directly affected your business
 Yes
 No
 Can't say
  Commented Stories
» Starting an import export business: Basic guide for beginners(1)
» 'Close contact with customers key to good customer services'(1)
 
 
About Us  |   Advertise with Us  
  Useful Links  |   Terms and Conditions  |   Disclaimer  |   Contact Us  
Follow Us : Facebook Twitter