Back-Breaking Inflation: Diwali festival is celebrated every year with the worship of Goddess Lakshmi and wish for prosperity. Devotional aartis resonate in homes to praise Goddess Lakshmi, but this time inflation has become the biggest obstacle in the preparations for the arrival of Goddess Lakshmi.
In fact, rising prices in India have not only affected the happiness of festivals of the people here, but due to inflation many people are also postponing their festivals. From decorations to sweets, inflation has put a lock on everything. In such a situation, the question arises – will we be able to welcome Goddess Lakshmi with full enthusiasm this time, or will Diwali be dull in the shadow of inflation?
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what do the statistics say
According to the data of the National Statistical Office, the retail inflation rate in India was 3.65 percent in the month of August, which increased to 5.49 percent in September, just a month later. That is, there has been a jump of 2 percent in the inflation rate in just one month. On a month-by-month basis, the inflation rate of vegetables reached 35.99 percent in the month of September, while the same rate was 10.71 percent in the month of August.Â
There has also been a significant increase in the prices of cereals, milk, fruits and eggs. According to the report, the inflation rate of pulses and other products has come down from 13.6 percent to 9.81 percent in August.
Increase in prices of edible oil
There has been a significant increase in the prices of edible oil this festive season. According to recent media reports, palm oil prices have increased by 37 per cent in the last one month, which has affected the household budget. Along with this, the cost of restaurants, hotels and sweet shops has also increased, as they use oil to prepare snacks. During the same period, the price of mustard oil, which is commonly used in households, has also increased by 29 per cent.Â
Why did the oil price increase?
The rise in oil prices comes at a time when retail inflation rose to a nine-month high of 5.5 per cent in September due to high prices of vegetables and other food items. Apart from this, the government last month increased the import duty on crude soybean, palm and sunflower oil, leading to a surge in prices. From September 14, the import duty on crude palm, soybean and sunflower oil has been increased from 5.5 per cent to 27.5 per cent and on refined edible oil from 13.7 per cent to 35.7 per cent.
How inflation is spoiling the fun of the festival
In response to this question, economist Vikas Bansal, while talking to ABP Live, said that inflation in the country has increased to such a level that people are now focusing only on essential things. Earlier, only food, clothing and shelter were included in the needs, but now health and education are also included in this list.
He further said that due to rising inflation, the income of the common man is being spent on these five basic things only. This is the reason why the hobbies of middle class families are not being fulfilled. Hobbies like eating in restaurants, watching movies in multiplexes, travelling and shopping are now in vain.
Although, middle class families are not facing any special problem in paying the school fees of their children or bearing the expenses of medicines of the elderly, but the possibilities of their entertainment and fulfilling their hobbies are getting limited.
What are the reasons for rising inflation?
Economist Vikas Bansal said that currently there is a period of global recession, which is also affecting India. He further said that on one hand, the salary of employees in the private sector has not increased, and even if it has increased, it is very less. On the other hand, the income of businessmen has also decreased. The main reason for this is that earlier there was a war between Russia and Ukraine, and now there is a conflict between Israel and Hezbollah. When there is a war in a large part of the world, it causes problems to all countries.
Vikas further says that due to these wars, the economy of Germany and America has also become weak. Because India provides IT services to America, when the economy of America is affected, it also has a direct impact on India.
Now understand this effect by taking an example that riots are taking place on one street of the locality and your shop is on the other street. In such a situation, customers will not come to your shop, and you will not be able to get goods from outside. That is, even if your shop has nothing to do with those riots, but your business will be affected by this. If a customer comes, he will come to buy only essential goods, while there is no question of buying luxury items. This is the reason why inflation is increasing.
How is inflation measured in India
The Government of India mainly uses the Consumer Price Index (CPI) and the Wholesale Price Index (WPI) to measure inflation. The CPI reflects the prices of goods and services purchased by consumers, including food items, housing, clothing, health services, transportation and education. It is updated every month and on this basis the inflation rate is estimated.
On the other hand, WPI i.e. Wholesale Price Index measures the prices of goods at the production level, which includes the prices of raw materials and goods sold at the wholesale level. It is used for products related to agriculture, industry, and mining. In the process of measuring inflation, price data is collected from various markets, then different commodities are given weights according to their importance. Finally, the indices of CPI and WPI are prepared on the basis of these data.
The Ministry of Statistics of the Government of India regularly releases reports of these indices, which helps in taking policy decisions and maintaining economic stability.
What effect does inflation have on the economy?
Inflation in India has several important effects on the economy. First, when inflation rises, the purchasing power of consumers decreases. This increases the cost of daily necessities, forcing people to cut down on their savings or other expenses. This leads to a decrease in consumer spending, which can impact economic growth.
Apart from this, rising inflation also affects businesses. Companies have to pay higher prices for raw materials for production, which increases their costs. In this situation, companies either increase the prices of their products or cut profits, which affects competition in the market.
When inflation rises, the Reserve Bank of India may raise interest rates, making borrowing more expensive. Higher interest rates hurt investment, as both businesses and consumers pay more to borrow money. This can reduce economic activity.
Another effect of inflation is on the government budget. When inflation rises, the government has to spend more on subsidies and other welfare schemes, which increases pressure on the government treasury. This situation can ultimately slow down economic growth.
Thus, the effects of inflation are not limited to individual consumers, but rather broadly affect economic stability, business activities, and government policies.
Also read:
Diwali 2024: Gold Nears ₹1 Lakh! Should You Invest Now or Wait? Don’t Miss Expert Insights!
Inflation’s Impact: Reduced Purchasing Power, Costly Business Operations, and High Interest Rates
Reduced Purchasing Power: Rising inflation lowers consumers’ purchasing power, leading to reduced savings and spending, which can slow economic growth.
Higher Business Costs: Companies face increased production costs, leading to higher prices or reduced profits, impacting market competition.
Increased Interest Rates: To combat inflation, the RBI may raise interest rates, making borrowing costly and slowing investments, which can strain both economic activity and government budgets.
