NEW DELHI (Commodity Online) : Although India’s food inflation eased to 7.78 percent for the week ended June 18, a study by leading independent researcher CRISIL said recent surges in inflation rates cost Indian households an additional Rs 5.8 trillion during 2008-09 to 2010-11.
The study shows that growth of private consumption expenditure in nominal terms increased to nearly 17 per cent per year during this period from 14 per cent in the preceding 3 years mainly due to the rise in food inflation.
“The rise in inflation to 8 per cent per year during 2008-09 to 2010-11 from 5 per cent in the preceding 3 years eroded the purchasing power of money and inflated the consumption expenditure bill of Indian households by Rs 5.8 trillion,” says Dharmakirti Joshi, chief economist, CRISIL.
The inflation was, however, not uniform, and food items saw a much sharper price increase as compared to non-food items. Food inflation was at 11.6 per cent during 2008-09 to 2010-11 as compared to non-food inflation of 5.7 per cent.
The CRISIL study concluded that price trends of commodities in the Wholesale Price Index (WPI) favour the middle and higher income classes, rather than poor and vulnerable Indian households who spend large part of their income on food.
“The middle and high income groups benefit more from falling prices of non-food manufactured items particularly durable goods, as they have higher disposable income to spend on other goods and services including consumer durables and for savings. The poor, with limited discretionary income to spend on consumer durables, do not benefit much from their lower prices. In contrast, rising prices of food items strain their discretionary spending,” adds Joshi.
