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Know how inflation is putting a witch on your pocket, harming the economy?

Inflation Impacts Saving: Due to the increase in the prices of food items, petrol and diesel, the retail inflation has reached 6.95 percent in the month of March, which is the highest level in the last 18 months. The same is the case with the wholesale price based inflation rate which stood at 14.55 per cent in March. And let us tell you that for the last 12 months, the wholesale price based inflation rate has remained above the double figure.

Inflation is more than RBI’s tolerance limit
RBI considers the retail inflation rate as the basis and the retail inflation rate has reached 6.95 percent, which is more than the RBI’s upper limit of 6 percent. There is no sign of relief from inflation. During the recently presented monetary policy review, RBI has projected an inflation rate of 5.7 percent for 2022-23. Whereas in 2021-22, the RBI had projected an inflation rate of 4.5 percent. But due to the rise in the price of edible oil for a long time and then the supply chain problems from the Russia-Ukraine war, the supply of many commodities, including petrol, diesel to natural gas, has been disrupted, due to which inflation has increased.

Inflation is putting a burglary on the pocket
Due to expensive fuel, people have to spend more money to get petrol diesel in the car. From CNG to cooking gas, the price of PNG has increased by up to 50 percent in the last six months. Edible oil, especially mustard oil, is still available at Rs 200 per kg. The price of wheat has increased due to which the flour is also becoming expensive. FMCG companies have increased the prices of soaps, detergents and shampoos due to increase in raw material prices, while consumer durables companies have given prices of their products ranging from ACs, refrigerators due to increase in commodity prices. Automobile companies have also increased the prices of cars, SUVs and two wheelers due to this. Its loss will be to the economy. Companies have to say that they did not increase the price as much as the cost has increased. This means that the margins of the companies are getting affected. If they have less profit then they will not make new investment as well as increase in salary of employees will also be less. This means that rising inflation is having an impact on the income of the people, on economic development and also on the economy. The negative effect will be that due to the expensive price, people can also stop the purchase of these things.

How is inflation affecting your pocket
Suppose even if someone’s salary increases during this backbreaking inflation, he has no reason to be happy. Because the extra income that has increased is being swallowed up by inflation. And those whose income did not increase, they had to spend money either by withdrawing money from their savings to buy that item. Or the quantity he used to consume earlier, is now consuming less. Think of it this way. You invest in fixed deposits of banks. Which is a better way of investment for common people in India. Many a times, due to the high inflation rate, there are occasions when instead of earning on these FDs, you are losing money. Inflation very cleverly affects your savings. For example, if you are getting 5 per cent interest on saving Rs 1000 but the retail inflation rate is 7 per cent, then you will get Rs 1050 after a year. But you will have to spend Rs 1070 due to inflation. That is, to buy the same item, 20 rupees will have to be spent out of pocket. Which you will obviously meet through other means of savings.

Inflation reduces purchasing power
Due to the backbreaking inflation, the purchasing power of the people decreases. In times of inflation, even if the income is high, it is not in reality. Purchasing capacity decreases with inflation. Because to buy the same item, you will have to spend more money than before. Other unnecessary expenses have to be cut. The ability to save decreases, which affects the savings schemes and the person is not able to make any new investments.

Debt is getting expensive due to inflation
Retail inflation has reached 6.95 percent. Which is more than 6 percent limit fixed by RBI. The way inflation is increasing, after that the interest rates have started getting expensive. From SBI to Axis Bank, Bank of Baroda and Kotak Mahindra Bank, loans have been made expensive. That is, those who are paying EMI may have to pay more EMI than before.

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