Monday, May 27, 2013

Inflation - the index and the real

Inflation – the index and the real:
Chidambaram-Montek led inflation index came down to push for a rate cut from the RBI in its impending monetary policy. The inflation indexed bonds (IIB) making their corporate entry initially would ere long move to individual investments as well, to distract from investments in gold. But this IIB is linked to wholesale price index instead of Consumer price index.

Just this week when I went to buy my rice and vegetables I noticed that my valet emptied in no time and had to resort to my credit card. Fine rice is at Rs.50 a kg. Dals range from Rs.60 to 80 a kg. Oils range from Rs.80-220 for Til oil. Vegetables soared to the highest with just two vegetables in the range of Rs.25 a kilo and the rest are all at Rs.40 a kg. Small savings are getting eroded fast, more painfully for the retired.
Politicians take comfort either in jails or public meetings not withstanding the soaring day temperatures. They keep on making promises that can hardly be fulfilled. 

Middle class are fast moving into the lower stratum. This is the level playing field of the government. Governments that indulge in this luxurious game may have to pay a very heavy price in the days to come when elections would be round the corner.