-Abhishek Vij
The festive season is underway. The holy Chhath Puja is near. The movement of travelers returning home has increased. Shopping in the markets is also increasing. As a result, after two years, the inflation rate has crossed the maximum limit set by the Reserve Bank. The Reserve Bank has set a safe inflation limit of 2% to 6%, but currently, inflation is so severe that the inflation rate for food items in the household budget has exceeded 8.94%. Inflation has increased by more than one percent in a single month, as the previous month, September, inflation was 7.74%. Consequently, the markets for consumer goods are fully feeling the pressure of inflation. These figures are emerging at a time when the consumer index has been set as the 2024 base year. If calculated using the old base year, inflation would have increased even more. Among vegetables, onion inflation has risen by 116.22 percent. Garlic inflation has risen by 7.74 percent, ginger by 48.32 percent, and lemon by 47.30 percent. Inflation has also exceeded 7 percent in rural areas of Andhra Pradesh, Karnataka, Kerala, and Uttar Pradesh. Experts say this situation will persist in the near future as poor weather has reduced sowing. Crop supply will be tight, and food items will remain expensive. Furthermore, this will impact interest rates, and the government may increase interest rates by 0.50 percent to control prices and reduce liquidity. These days, branded goods are in great demand. The companies that supply these goods have passed the burden of inflation onto consumers. Everyday items have become 70 percent more expensive. Milk, ghee, soap, and dry fruits have become more expensive in the past two months. Amul and Mother Dairy have increased milk prices by 4 to 5 rupees per kg. On Friday, Verka also increased milk prices by 1 to 8 rupees. Detergent powder and commercial LPG have also become more expensive. While raising the prices of dairy products, dairy companies are citing the increased cost of feed, packaging, and fuel. Companies manufacturing everyday items are also passing the burden of inflation on to consumers, citing the rising cost of raw materials. Recently, the prices of kitchen ghee and butter have increased by up to 50 rupees. The same situation is prevalent in South India. Compared to last Diwali, pistachios have become 60-70 percent more expensive, and almonds 20 to 40 percent more expensive. Cigarette prices have risen for the second time this year. As the market begins to groan under this inflation and purchasing power is impacted, companies have resorted to another trick. They have reduced the quantity of their brand packaging while keeping the price the same. Unable to reduce prices, they have reduced the quantity of the product itself. Thus, consumers are facing a double whammy: first, reduced quantity, and second, increased prices. Assessing its economic impact, inflation doesn’t always benefit the seller; it’s also a thorn in their side, as it impacts companies’ demand and customer base. This is what’s known as a recession in economics. In such a situation, companies don’t receive adequate compensation due to low demand. The Indian government should be aware of the rising inflation and take appropriate steps.