Inflation Is Now A Global Menace

C Voter-IndiaTracker has been doing a daily poll of ordinary Indians since March 2020 when the country faced a complete lockdown because of the Covid pandemic. Since then, a majority of respondents have identified jobs and inflation as their major areas of concerns. For close to 2 years, two out of every three respondents have said that prices of essential commodities have gone up so much that thy are finding it difficult to manage household expenses. Even the Reserve Bank of India was forced to publicly admit in May this year that inflation was becoming a major concern fr the central bank. It had hike the repo rate by 40 basis points in May followed by another 50 basis points hike this month. The Governor of the Reserve Bank of India, Shaktikanta Das estimates that the retail inflation rate in India will remain high ( around 7%) for most of the year because of rising fuel and food prices. That can only spell bad news for middle and lower middle class Indians as they struggle with stagnant incomes and rising prices.

But Indians are not the only ones to be hit hard by inflation. As a matter of fact, the rate of retail inflation in India is perhaps the lowest among the major economies of the world. One is not even talking of neighbouring countries like Sri Lanka and Pakistan where inflation is rampant and virtually out of control. As the accompanying chart shows, inflation in virtually every major economy in the world is higher than in India. The rate of retail inflation in the United States during the month of May, 2022 stood at 8.6% compared to 7.04% in India. There are widespread news reports in the United States about the poor in the country are struggling to make ends meet because of high and persistently rising prices. The retail inflation rate in May, 2022 in the United States is the highest in forty years. India, on the other hand, is accustomed to periodic bouts of high inflation.

Thanks to the war in Ukraine, there have been widespread disruptions in supply chains of oil and food which have triggered massive price hikes. For instance, another G-7 club member Canada reported a retail inflation rate of 7.7% while United Kingdom reported an inflation rate of 9.1% in May 2022. Another emerging economy Brazil too has been hit hard by a steep hike in fuel and food prices and reported a retail inflation rate of 11.77% during the same period. One of the worst performers on this front is Turkey that is suffering from high inflation for years. In May, 2022, the retail inflation rate in Turkey was an astounding 73.5%. Of course, terrible economic hardships in other countries would be no consolation for a majority of Indians as they are concerned with thieir own family and household budgets. They would be hoping that the projections made by the RBI about inflation dropping 2023 onwards comes true.