Government claims very low inflation, so why is everything costly?

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While the WPI hit to bottom according to Govt. reports, the grocer’s bill doesn’t reflect the good news.

Where is the gap?

Govt. takes into account some 91 odd items to calculate WPI (wholesale price Index) and sadly those items are not used by general public anymore. Eg DALDA oil, which is replaced by Refine oil now; Coconut hair, which is used by grand moms only are part of the elite list.

The rise is more for essential food articles over non-essential food articles. Most of the item used by common man is costly, but these items are not included in the list used to calculate WPI. Also, the computation does not include vital costs like housing, electricity charges, communication costs and educational expenses.

Statistics do not lie but, if seen out of context, can mislead.

For the common man, the last couple of months have been a cruel paradox. The government has been crying that inflation has come down to record levels, from a high of 6.5 per cent in June last to an astonishing 3.2 per cent last week. What baffles consumers is the fact that prices have been increasing and show little inclination of ever coming down.

Translated into Common man language, it means that if a commodity cost Rs 100 in November 1996, it would today cost Rs 103.2 in the wholesale market and Rs 105 in retail shops. But sadly this is not a reality. A commodity which costs Rs 100 in November 1996, costs Rs 160 -200 in retails shops today.

What's more, the rise in prices is across the board. Pulses, rice, oil, milk, vegetables and fruits -- the mainstay of millions of vegetarians -- have all recorded increases of over 20 per cent, while sugar, wheat and rice rose over 30 per cent.

It might be politically satisfying for Govt. to boast its achievements as macroeconomic parameters, but unless they are translated into tangible benefits for the common man, very few will buy the figures or believe the government.

Govt. should work on controlling inflation for essential food articles, rather than manipulating figures and trying to convince common man that inflation is low.

Author: Gopal Agarwal

Tag: Business, Day to day problems, Government, Personal finance, Politics