Cost of living hits the roof, shop-end prices up 10.3%
Maybe you've already noticed, but if you haven't: retail prices of almost all products and services of everyday use - from food to footwear and movie tickets to medicines - rose sharply in April, signaling India's inability to control household inflation, partly stoked by a falling rupee. Up, up and awaybusiness Updated: May 19, 2012 01:48 IST
Maybe you've already noticed, but if you haven't: retail prices of almost all products and services of everyday use - from food to footwear and movie tickets to medicines - rose sharply in April, signaling India's inability to control household inflation, partly stoked by a falling rupee.
Data released on Friday showed that the overall consumer price inflation - a more realistic cost-of-living index because it captures shop-end prices - rose 10.36% in April. In cities, it was even higher at 11.10% against 9.86% in rural India. Retail inflation for March was 9.38%.
This means average middle-income Indians are making adjustments to stay afloat."We are cutting expenses where we can," said Swapna Mukerjee, a mother of two in Mayur Vihar.
On Friday, finance minister Pranab Mukherjee admitted in a written reply to the Lok Sabha that US credit rating agency Standard and Poor's (S&P) comments on India's worsening fiscal health will have some "perceptional impact".
"The government has taken note of these concerns."
On a year-on-year basis, vegetable prices clocked the sharpest rise at 24%, while that of milk and allied products shot up 14.7%. Oil and fats rose 17.5%. Non-alcoholic beverages - like your favourite can of Coke - rose 9.52%.
Prepared meals prices - a proxy for restaurant rates - rose 9.59% partly because the government hiked service taxes and soaring vegetable prices.
Paan and tobacco prices rose 11.3%, while healthcare expenses accelerated 6.9%. Even prices of personal care products went up 8%.
The rupee's falling value -which hit a fresh all-time low at Rs. 54.91 to the dollar - makes imports costlier. This has pushed up prices of many manufactured products that use small quantities of imported raw materials.
On the bourses, stocks tumbled 200 points during the day touching a four-month intra-day low of 15,809 before recovering to close at 16153 points, up 0.5%, or 82 points.
The high prices pose larger macroeconomic problems: the Reserve Bank's scope to cut interest rates to kick-start the economy now looks limited.