<p>High inflationary pressure driven by food and fuel erodes the purchasing power of poor more than well-off households and the real inflation felt by the bottom half of the population was 40 basis points higher than the official retail inflation data, a research report showed.</p>.<p>The effective inflation faced by the bottom 50 per cent of the population (both in rural and urban areas) stood at 7.2% in the first nine months of 2022-23, India Ratings and Research (Ind-Ra), the local unit of Fitch Ratings said in a report.</p>.<p>“Ind-Ra’s analysis reveals that a high inflationary episode driven by food and fuel erodes the purchasing power of poorest more than well-off households. This is in contrast to the scenario when inflation is driven by core items (which excludes food and fuel),” said Paras Jasrai, analyst at India Ratings and Research.</p>.<p>Retail inflation does not affect all households in the same way because the consumption baskets of households belonging to different expenditure strata vary. In general, the share of food & beverages items in the consumption basket of households belonging to the lower expenditure class would be higher and vice versa. This also means that the effective inflation faced by these households would be higher than the headline inflation if it is driven by food items, the rating agency said.</p>.<p>As per the latest government data, the Consumer Price Index (CPI) based retail inflation rose to a three-month high of 6.52% in January fuelled by a surge in fuel and food prices. The headline inflation has remained above the RBI’s upper tolerance limit of 6% in the current financial year, except a brief respite in November and December.</p>.<p>Meanwhile, addressing a post-budget press conference in Jaipur, chief economic advisor V Anantha Nageswaran said the retail inflation is expected to come down to 5% in the second half of the next financial year.</p>.<p>Nageswaran said the spike in inflation in January was largely due to the base effect coming from a sudden outburst of the heat wave in March last year when the stocks got depleted.</p>.<p>“We have seen that inflation passthrough coming from imported prices, whether it is metals, minerals, crude oil or edible oil passing onto CPI, has got through already. Therefore, we don’t see the second round coming from wholesale prices,” he added.</p>
<p>High inflationary pressure driven by food and fuel erodes the purchasing power of poor more than well-off households and the real inflation felt by the bottom half of the population was 40 basis points higher than the official retail inflation data, a research report showed.</p>.<p>The effective inflation faced by the bottom 50 per cent of the population (both in rural and urban areas) stood at 7.2% in the first nine months of 2022-23, India Ratings and Research (Ind-Ra), the local unit of Fitch Ratings said in a report.</p>.<p>“Ind-Ra’s analysis reveals that a high inflationary episode driven by food and fuel erodes the purchasing power of poorest more than well-off households. This is in contrast to the scenario when inflation is driven by core items (which excludes food and fuel),” said Paras Jasrai, analyst at India Ratings and Research.</p>.<p>Retail inflation does not affect all households in the same way because the consumption baskets of households belonging to different expenditure strata vary. In general, the share of food & beverages items in the consumption basket of households belonging to the lower expenditure class would be higher and vice versa. This also means that the effective inflation faced by these households would be higher than the headline inflation if it is driven by food items, the rating agency said.</p>.<p>As per the latest government data, the Consumer Price Index (CPI) based retail inflation rose to a three-month high of 6.52% in January fuelled by a surge in fuel and food prices. The headline inflation has remained above the RBI’s upper tolerance limit of 6% in the current financial year, except a brief respite in November and December.</p>.<p>Meanwhile, addressing a post-budget press conference in Jaipur, chief economic advisor V Anantha Nageswaran said the retail inflation is expected to come down to 5% in the second half of the next financial year.</p>.<p>Nageswaran said the spike in inflation in January was largely due to the base effect coming from a sudden outburst of the heat wave in March last year when the stocks got depleted.</p>.<p>“We have seen that inflation passthrough coming from imported prices, whether it is metals, minerals, crude oil or edible oil passing onto CPI, has got through already. Therefore, we don’t see the second round coming from wholesale prices,” he added.</p>