Real inflation felt by India’s poor is 40 basis points higher than the official number in the current fiscal year, eroding purchasing power of a vast section of the South Asian nation’s population, according to India Ratings & Research Pvt., the local unit of Fitch Ratings Ltd.
(Bloomberg) — Real inflation felt by India’s poor is 40 basis points higher than the official number in the current fiscal year, eroding purchasing power of a vast section of the South Asian nation’s population, according to India Ratings & Research Pvt., the local unit of Fitch Ratings Ltd.
“The effective inflation faced by the bottom 50% of the population stood at 7.2% during April-December,” India Ratings analyst Paras Jasrai wrote in a report Monday.
India’s headline inflation remained above the central bank’s target ceiling of 6% for most part of last year due to high food prices, which comprise about half of the inflation basket. Price gains breached the RBI’s 2%-6% mandate again in January after moderating for three months.
To contain price pressures, the government curbed exports of key grains such as wheat and rice, while the Reserve Bank of India has raised borrowing costs by 250 basis points since May last year. The central bank is seen hiking interest rates further in its April monetary review.
Real inflation experienced by top 50% of the population at 6.9%, as shown by the research, was marginally higher than the official average of 6.8% in nine months to December.
“As we move up the expenditure strata, the share of food and beverages in the consumption basket keeps declining and hence the intensity of inflation being faced by them also keep declining,” Jasrai said.
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