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  • Writer's pictureAshutosh Singh

Why is inflation high in India?

Updated: Oct 18, 2023

Why is inflation high in India

Remember those childhood days when cookies were 2 times bigger and 3 times cheaper? Those days of cheap costs aren’t going to come back, at least any time in the near future. And the reason for that is inflation. So what is inflation, and why is it so high in India?

According to Investopedia, inflation is “the rate at which prices for goods and services rise”. And in India, inflation rate for 2022 was 6.70%, a 1.57% increase from just the previous year. The inflation rate has almost always been positive since the last 50 years, as shown in the graph below (source:

So why is it always so high and rising even today? Let us see the most important reasons:

  1. The COVID-19 pandemic: The pandemic has caused supply chain disruptions and shortages of goods and services, which has pushed up prices.

  2. The war in Ukraine: The war has also caused supply chain disruptions and has led to higher energy prices.

  3. Government stimulus spending: The government spent a lot of money to stimulate the economy during the pandemic, by providing free food, vaccines, etc. This has also contributed to inflation.

  4. Rising wages: Wages are rising, which is giving consumers more money to spend, which is also pushing up prices of products.

  5. Rising food prices: As per The Economic Times, retail inflation in India rose considerably in June to 4.81 per cent, largely due to a sharp spurt in vegetable prices.

  6. Weakening currency: The Indian Rupee was one of the worst-performing currencies in Asia in 2022.

What can we do as ordinary citizens to tackle high inflation?

  1. Take advantage of government assistance programs: There are a number of government assistance programs available to help people who are struggling with inflation. You may be eligible for cheaper food grains, housing assistance, etc.

  2. Invest in assets that are likely to appreciate in value: If you have some extra money, you may want to invest in assets that are likely to appreciate in value, such as gold or real estate. This will help you to protect your savings from the effects of inflation.

  3. Cut back on unnecessary spending: If you can, try to cut back on unnecessary spending. This will help you to save money and protect yourself from the effects of inflation.

  4. Start saving money to buy products instead of making impulse purchases with loans. Using an app such as Blance would be a good start.

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