The official figures on inflation should be a cause of disquiet for the concerned quarters in the administration.
The Consumer Price Index (CPI), benchmark inflation measure in this part of the globe, in Jammu and Kashmir is very higher. It is above CPI of national average and Reserve Bank of India (RBI)’s upper tolerance limit of 6 per cent.
Retail inflation, as measured by the CPI, grew 4.5% on an annual basis in October. This is little higher than the 4.3% growth in September and marks a reversal of the falling trajectory of headline CPI since June.
Wholesale prices, as measured by the Wholesale Price Index (WPI) grew at 12.7% in October, making it the seventh consecutive month of double-digit inflation.
While the cut in petrol-diesel taxes might provide some relief on the CPI front, this is not going to be enough to bring it down significantly. WPI, with tailwinds from international commodity prices, especially crude oil, is likely to stay elevated. The price of cooking gas cylinders has reached to over Rs 900. Mustard oil prices are scaling to new highs. Vegetables have become very expensive too. Chicken, fish and egg prices are on a higher side.
Even as there are immediate measures to be taken at the government levels, the high inflation is set to reduce the real incomes of consumers, which will in turn slow down growth of consumer demand amidst covid-19 hit economy.
Vast majority of people across India have reduced or nominal incomes from the last two years. Any further inflation can have devastating effects on aggregate demand. This, in turn, would worsen the push required to have a sustained recovery. One of the ways forward as per the experts is to reduce retail fuel prices by a cut in the taxes.
There are some factors which are beyond the local government’s reach and the least it can do is to streamline the markets especially in controlling factors that are associated with pure malpractices by some unscrupulous people. The administration needs to face local challenges with a lot more authority than it is showing or lacking presently.
A good number of people are already reeling from job losses while income for the vast majority has dwindled and in such a scenario the persistently high inflation is untenable. Poor need support and rising inflation adversely impacts them.