Ghar-Kharcha: What's More Expensive? Just About Everything.
From oil to chicken, clothing to utensils and fuel almost everything seems to be costing more.
Retail inflation in March rose to 6.95%, the highest in 17 months. Of the nearly 300 items that make up India's inflation basket, nearly half are now seeing inflation higher than 6% -- the central bank's upper threshold for retail inflation.
Inflation is worse in rural than in urban areas. Those with consumption baskets more focused on food are hit harder than those with a larger share of disposable spend.
"Our analysis shows the poor are bearing the burden of inflation the most, given that food—which occupies the largest share of their consumption basket—recorded the sharpest rise," said DK Joshi, chief economist at Crisil. The bottom 20% of income earners in urban and rural areas are worst-hit, Joshi said.
Thalinomics: Salads Are The Way To Go!
Food and beverage inflation rose for the sixth straight month to 7.5%, the highest since November 2020. Month-on-month, prices rose 1.3%, the sharpest seasonally adjusted increase in the current series, according to a note by QuantEco Research.
Refined oil, across sunflower and soybean, saw prices rise 10.7% over the last month as supplies were disrupted due to the Russia-Ukraine war. Prices are up 19.2% over a year ago. Chicken prices spiked as well, up 20.7% year-on-year and 13.2% month-on-month.
There was some reprieve when it came to vegetables, with only potatoes turning more expensive.
Salads are the way to go this summer.
Lemons saw the sharpest spike in prices in March compared to February, rising 29.28%. Prices of green chilies shot up 20.86%.
Replace that nimbu-mirch with the Turkish evil eye beads maybe?
Discretionary Spends: Wait For A Summer Sale?
Beyond food, several items of daily and discretionary use are seeing high price increases. Blame the higher cost of raw materials like cotton and increased transportation costs.
Clothing and footwear inflation rose for the eleventh straight month to 9.4%—the highest in the current series that maps data from 2014. Here again, the rise was higher in rural areas at 10.2%.
Inflation in household goods and services, too, rose for the eighth straight month to 7.7%, again the highest in the series. Utensils, furniture and fixtures, almirahs, dressing tables, pillows, quilts, mattresses, cloth for upholstery and curtains continued to show double-digit price rise.
Inflation in items of personal care such as soaps rose to a series high of 13.4%, while shampoos and hair oils recorded inflation of 6.66%.
Prices of mobile phones rose 7.6% annually, the highest in the series.
Gold prices rose 12% in March against 2.34% in February.
Fuel And Light: Breather But Short Lived
The impact of fuel price hikes announced in March is yet to hit.
As such, petrol, diesel and LPG prices rose at a pace of about 1% or less between February and March. Kerosene prices, however, rose 65.2% under the PDS over a year ago. Kerosene prices rose 14% in the open market. Kerosene has been seeing regular price adjustments since February even when petrol and diesel were on status quo, Vivek Kumar, economist at QuantEco Research, said.
Airfare rose 31.4% in March.
Much of the hit on fuel prices will be felt in April.
Domestic pump prices for petrol and diesel have risen 10-12% since March 22, 2022, and now reflect global oil prices at $100 a barrel, said Pranjul Bhandari, chief India economist at HSBC.
Is Your Salary Keeping Pace?
Are salaries and wages rising in sync with higher prices?
Wage growth is not a uniform story, said Joshi. While rural wage growth is not very strong and definitely below rural inflation, urban inflation is lower but wage growth is restricted to markets where labour supply is tight such as in IT, ITeS and some parts of the urban formal economy, he explained. "We have to see if wages in services pick up amid a revival in contact intensive industries."
"In all, wage growth is in line with recovery trends—K-shaped."