Spending Power gets Negatively Effected by the Inflation: ASSOCHAM

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Inflation may have dropped significantly from last year, but middle class people still find high prices of goods and services consumed by them, growing beyond their comfort level with pulses, prepared meals, snacks, education, health and clothing staying expensive, an ASSOCHAM analysis has pointed out.

At the retail level, the inflation as measured by the Consumer Price Index (CPI), has been very high close to 30% for pulses with some of them reaching Rs 200 a kg, while spices which go into preparation of the curries have witnessed price rise of 9.2%.
Despite fuel prices coming down and moderate rise in wages, the cost of education and health services, the two critical areas of interest to the middle class has gone up, much higher than the headline number of CPI for September of 4.41%.
The CPI inflation for education was up close to 6 per cent and health 5.4 per cent for September, 2015. “With severe shortages of education and health facilities in the public sector, the middle class has to depend on the private sector schools, colleges and hospitals and their costs have become quite high.
“While the annual increase in prices of these services may not show huge rise, the base price of such facilities is so high that it is becoming increasingly difficult for a large number of people in the cities and small towns to afford them. Some of hospitals in Delhi charge as much as Rs 1 lakh a day ,” ASSOCHAM Secretary General Mr D S Rawat said.
Mr. Rawat said, the public expenditure on health and education should be raised significantly both at the Central and state government level. The recent outbreak of dengue and swine flu show how the state funding has been inadequate for improving the overall health services along with hygienic facilities.
The chamber analysis shows that other items of use for the middle class like meat, fish, milk and milk products have also seen significant increase between 5 and 5.5 per cent. “The headline number drop has made interest rates somewhat softer, but the EMIs have not significantly come down either”.
“While the RBI has in the last instance reduced the policy rate by 50 basis points, the average transmission is not above 30 bps despite so much of prodding by the government and the Reserve Bank of India (RBI)”.
While such things are not healthy, a large number of people do consume pan, tobacco and alcoholic beverages and their prices have seen an increase of about 10 per cent year on year in September at the retail level. However, at the WPI level, prices of such a group, barring intoxicants, have come down.

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