Inflation rate came come down to 8.90 per cent in the second week and this can be attributed to the fall in prices of crude oil, metals and other manufactured items. Inflation declined by 0.8 percentage points during the week ended November 8 from 8.98 per cent a week ago, prompting analysts to predict that the rate of price rise would come down to around 5.5 per cent this fiscal end, much lower than what was anticipated by the Reserve Bank.
Whether this dip in inflation rate is being of any help is something you need to ask the rural population. 800 million population of India lives in rural areas and majority of them are below the poverty line. For this population, inflation has hardened by 11.1% since October. The news of the inflation rate sliding to a single digit mark is indeed a good sign of relief for the government officials but for this 800 million population, the price rise is becoming grimmer and grimmer.
A report published in leading dailies says that the consumer price index for agricultural labourers has hardened by 11.1% during October, up from the previous month’s 11%. In the case of the consumer index for rural labourers, the trend is identical — transiting to a double-digit inflation figure in August 2008 and charting a further upward course in the subsequent two months. So there is a disconnection in the widely followed WPI (Wholesale Price Index, where.a set of 435 commodities and their price changes are used for the calculation. The selected commodities are supposed to represent various strata of the economy and are supposed to give a comprehensive WPI value for the economy) and the inflation rate at the retail level. If the WPI is to be believed, the monthly average index for October has dropped to 238.8 from 241.3 in the preceding month and the WPI-based inflation rate has eased to 11% from 12.2% in September. In the first two weeks of November, not only has the index receded further but the inflation rate has dipped to 8.98% and further to 8.90%. With regards to the CPI (Consumer Price Index), there seems to be no let-up. Both the index for agricultural labourers and rural labourers has risen by four points to reach a level of 459 in October. When the current fiscal year had opened, both these indices stood at 429 and have relentlessly spiraled upwards since then. Between March and October, these indices have advanced by as much as 8.5%.
These figures clearly show that the inflation has been controlled at the wholesale level but at the retail level, the situation is getting worse. And this is where rural people are getting hit badly by the inflation monster. The double-digit inflation has made their life more miserable considering the fact that they do not enjoy indexation which confer some degree of immunity from rising prices. Therefore, it is clear that the WPI-based inflation rate is only applicable to the minority population of the country.
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