Inflation and aam admi

Be ready for another 25 bps rate hike when the Governor announces the credit policy. After all, he has to rein in or maybe reign in inflation.

June 14, 2011 2:51 IST | India Infoline News Service
Inflation numbers floated around by the Finance Minister and RBI Governor are completely out of sync with ground reality. The neighbourhood istrywallah – who irons washed clothes - has raised his rates from Rs. 3 to Rs. 4 – which translates into an inflation number of 33%! And this  happened overnight without any warning or ‘measured steps’. I spent some time to get his side of the story. This was more because of his friendly nature and perhaps the fact that he is from UP, the neighbour of the state where I grew. He seemed hard-pressed and blurted out a long list of items whose prices have gone up - vegetables, milk, cereals and even coal. He also has an irate wife who seems to be spending faster than his income. I failed to understand why he was so bothered about coal as to the best of my knowledge istrywallah’s in our city use the electric iron – and that too quite often from plug and pay meters which many not be fully licensed.
Drinks that cheer are getting into higher zones.  Maybe some well meaning moral guardian may argue that high prices are a deterrent. But what about responsible drinkers like me? The prices of hard drinks and cocktails have increased dramatically across the board including the neighbourhood booze shop. The prompt reason given is the change in excise laws. Media is now writing about the Goan aunties who used to sell alcohol in the days of prohibition. For the not so well informed, Maharashtra, like its illustrious neighbour, Gujarat, also had its tryst with Prohibition and luckily sanity prevailed.  The way prices are going up I think people will soon start choosing their drinks like they choose wine – just based on the price.  Market analysts will later analyse how growth of white spirits declined because of Indian customer getting nostalgic – they started drinking Old Monk. I hope junta does not hit rock bottom and start drinking country stuff.
And why just drinking? Eating outside has also become very expensive. At least brands like Hard Rock Cafe should do better than putting new price stickers on their menu cards. They could have definitely printed a new menu given the increase. On top, delegated the task to a conscientious worker - two menus had two different price stickers on the same item.
Someone defined inflation as something when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you had hair. I don’t need regular haircuts but inflation here too affects me as I have two growing up sons. Recently, when I took my kids for a haircut, the regular person at the kids’ saloon was missing and I generally got chatting with the saloon owner who told me that of all the places, our man has moved on to Saudi Arabia. It seems he could not make ends meet in Mumbai. I was later catching up with my neighbourhood saloonwallah who like most people in his profession gives global update of news, trivia and of course cricket and cinema. Fortunately, they have not started advising on stock markets – it means we are far away from a bull market. He told me that the saloon force is also doing its part in the global war on terror. The barbers pay money to agents who sent them to Delhi for an interview and those who clear the formalities land up with a job in Afghanistan of all places. They give the Americans forces their smart close crop haircut. No wonder Pakistan is angry with us because Indians are directly supporting NATO forces against the Al –Qaeda.
Last heard that even the shoe polish wallahs at railway stations have hiked their rates from Rs5 to Rs7 – 40% increase. Be ready for another 25 bps rate hike when the Governor announces the credit policy. After all, he has to rein in or maybe reign in inflation.

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