Inflation in India feels higher than what official data reveal
REAL inflation felt by India’s poor is 40 basis points higher than the official number in the current fiscal year, eroding purchasing power of a vast section of the South Asian nation’s population, according to India Ratings & Research, the local unit of Fitch Ratings.
“The effective inflation faced by the bottom 50 per cent of the population stood at 7.2 per cent during April-December,” India Ratings analyst Paras Jasrai wrote in a report on Monday (Feb 20).
India’s headline inflation remained above the central bank’s target ceiling of 6 per cent for most part of last year due to high food prices, which comprise about half of the inflation basket.
Price gains breached the Reserve Bank of India’s (RBI) 2 per cent-6 per cent mandate again in January after moderating for three months.
To contain price pressures, the government curbed exports of key grains such as wheat and rice, while the RBI has raised borrowing costs by 250 basis points since May last year. The central bank is seen hiking interest rates further in its April monetary review.
Real inflation experienced by top 50 per cent of the population at 6.9 per cent, as shown by the research, was marginally higher than the official average of 6.8 per cent in nine months to December.
GET BT IN YOUR INBOX DAILY
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
“As we move up the expenditure strata, the share of food and beverages in the consumption basket keeps declining and hence the intensity of inflation being faced by them also keep declining,” Jasrai said. BLOOMBERG
KEYWORDS IN THIS ARTICLE
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Global
IMF knocks Biden’s China tariffs as risk to US, world growth
Top HSBC shareholder Ping An exploring ways to cut US$13 billion stake
Digitalisation of banking creates new risks, says global watchdog
More companies are selling shares to help cut debt
Red Sea disruptions are splitting global LNG trade into regions
US efforts to reshape global supply chains gathers pace in Asia