The never-ending price hike for fuel is not news, but what about other things? What else has inflation rate touched?
Now, Inflation has been a pain for the public for so many years. It seems the prices are always on the rise. We haven’t heard the term ‘deflation‘ in centuries it seems. But, what exactly is inflation? And what are the factors that contribute to it?
Simply put, inflation is the constant rise of the prices of commodities in any economy, whereas deflation in an economy is where there is a constant fall in prices. It means, for example, that the same money today will buy less in the future. Inflation causes the buying power to diminish. The inflation rate of an economy depends on various factors. There are loads of jargon and complicated theories about the causes, but we’ll put it simply here.
One of the causes could be an increase in public spending, or export-related or tax reductions, or imposition of indirect taxes. Interestingly, increase in money supply can also cause inflation. However, inflation amid pandemic is a little more complex, although the above-mentioned causes can still apply in a pandemic-ridden world.
Inflation in India
India, in the recent years has seen massive inflation. The most apparent rise has been in the prices of petrol and diesel. According to RBI,the inflation rate, as per the month of October, has been down to 5.3%, which is lower than the 5.7% it was in the months before October.
The fuel price inflation, according to analysts, is due to sharp rise in the global prices of crude oil. And even when the global prices went down a little bit, the Indian government did not relent and kept the prices up.
By now the price of petrol and diesel are above the 100 rupees mark in all the states of India. Mid September, the prices fell down a few paise, however, they shot up once again. The RBI governor, too has indirectly asked the government to relent some on the prices of fuel.
But these are very obvious commodities that have a larger effect on our pockets. But what about small things? There are several commodities that do not seem like a big deal, but they too have faced the effects of inflation. Commonplace objects, such as matchsticks have faced immense inflation and most of us are not even aware of it.
Did you know matchsticks didn’t see a price hike in the last 14 years?
Matchsticks were the single thing that had not seen a price hike in almost 14 years. For 14 years the price of Matchsticks has remained 1 rupee without any change. Sivaski based All India Chamber of Matches has announced that starting December 1, the price of Matchsticks would be 2 rupees, then the 1 rupee it previously was. This is a 100% inflation in the prices.
The last time that the prices of Matchsticks were hiked was in the year 2007, when the price 50 paise Matchstick was increased to 1 rupee. The producers and manufacturers stated that the reason for the 100% inflation is due to the sharp increase in the prices of the raw materials required to make matchsticks.
According to reports, the initial hike in prices of Matchsticks were to be of just 50 paise, however, this idea was discarded as it would be tough for shopkeepers to exchange 50 paise as the coin is not in use anymore.
So evidently, inflation has touched even the smallest of things. Controlling the inflation rate is the most daunting task faced by the RBI. Poor policy decisions at this point of time could propel the country into an even deeper ditch that it is in at this moment. The government has been trying to get it under control which does not seem very effective. However, there are a few policies which seem necessary and might show better results.