The Ever-increasing Inflation is Burning Holes in People’s Pockets

Inflation is at its peak across the country. After retail inflation, now there has been an increase in wholesale inflation. Driven by higher fuel and food prices, India’s wholesale price-based inflation rose to 14.55 per cent in March from 13.11 per cent in February. Inflation has remained above fourteen percent for the last one year. There has been a slight decrease in some areas, but the gross wholesale inflation rate is being recorded above fourteen percent.

A Hindustan Times’ report suggests that the common man, troubled by all-round inflation, has reduced the consumption of everyday items (FMCG). They are turning to smaller packs. People are moving away from regular brands to save money. They are buying smaller packs or turning to cheaper brands.

Retail Intelligence Firm, Bizom, which tracks the sales of over 60 lakh retail and grocery stores across the country, said in a recent note that sales of small packages in rural areas picked up from January to the first week of March. For example, sales of small packages grew by 2 per cent in beverages, 4 per cent in personal care products and 10.5 per cent in commodities. According to Bizom, the margins of the country’s big FMCG companies have come down because of which, they have increased the prices of their products by up to 30 per cent in recent months. These include Hindustan Unilever, Marico, Dabur India, Emami and Britannia.

According to Dabur’s analysis, sales of the company’s shampoo, toothpaste and hair oil are either getting flat or are declining. Soap sales in March fell by five per cent from a month earlier. Marico, a consumer goods firm that sells popular hair brand Parachute, said in its March quarter update that the company has increased prices of all the items. Market researcher Nielsen said that the ever-increasing inflation is burning holes in people’s pockets. Both the prices and the expenses have been rising.

We all know that as the prices increase, the value of money decreases. And the way all this is happening, it seems that India is moving towards ‘Hyperinflation’?

Now you would ask what this ‘Hyperinflation’ is?

In fact, ‘Hyperinflation’ is the highest level of inflation, in which the prices of goods increase to a great extent and the purchasing power of money is greatly reduced. The way inflation has increased in the last few years and the way currency notes have gained circulation after demonetization, the day is not far when you will carry a bag full of notes only to buy a handful of veggies to your dismay(You will pay more for buying less).

The RBI has printed notes uncontrollably and piled them up in the last one and a half years. In the last 15 months of the Corona period, the value and circulation of currency in the country has increased rapidly. On January 3, 2020, the total value of currency in the country was Rs. 21.79 lakh crore, but as of March 2021, according to the information given by RBI, the circulation of cash in the Indian economy has increased to Rs. 28.6 lakh crores. In the last one and a half years, currency notes have been printed and introduced in the market many times more than the previous years, and we are being witness to its results which are not good. The purchasing power of rupee has been decreasing since last one and a half years.

When there is an increase in the prices of goods as a result of a decrease in the purchasing power of a currency, then this situation is called ‘Inflation’………and inflation has reached its peak in India at this time.

On the other hand, inflation has its pros as well. If the condition is ideal, it is believed that inflation also leads to employment generation, i.e., there is a proportional relationship between inflation and employment. This relationship is depicted also through the Phillips curve, named after the economist Phillips. According to the Phillips curve, employment increases with increase in inflation, and the level of unemployment increases with a decrease in inflation.

But here, employment is decreasing and inflation is increasing. We are going through a phase of ‘Stagflation’ or ‘Recession’. India’s GDP growth rate is continuously falling.

‘Stagflation’ is a situation in which the rate of inflation is very high, the economic growth rate is down, and unemployment remains consistently high. In other words, a situation of slow economic growth with inflation and relatively high unemployment is called ‘Stagflation’.

The times are terrible. The fire caused by the inflation of petrol and diesel has now reached the grocery stores. Women say that the budgetary balance of their kitchens has deteriorated due to the ever-increasing inflation. People are worried. If we look at the graph of inflation of food items, then in the last three months, the kitchen expenses of a house have increased by 20 to 30 percent. There is also a reason behind this price increase which the common man is not able to understand. Let me remind you that the Lok Sabha had passed the Essential Commodities (Amendment) Bill, 2020, on September 15, 2020.The government amended the old law to exclude cereals, pulses, oilseeds, edible oils, onions and potatoes from the purview of section 3(1),i.e., in a way, hoarding has been flagged off once again. Within fifteen days after that, the rate of Toor dal had increased from Rs. 80 to around Rs. 120 per kg across the country.

Prior to the implementation of this law, there was a ban on excess storage of essential commodities and excessive profiteering. There were strict legal provisions for action against those who did so. The government has abolished these laws. Now, the government does not have any control over the storage or hoarding of these items by private buyers. The Tughlaqi decision (the dictatorial decision) of the Modi government has been one of the biggest reasons for the price rise that is happening now. The Author is freelance journalist