Poorer sections of society bore the brunt of inflation: CRISIL study
29 Jun 2011
Though rising income levels have helped the middle class cope with higher prices, the worst sufferers of inflation have been the poor who have been badly hit.
The middle class and the upper middle class have also benefited from the lower spending on food as a proportion of their total income, while in some instances have also benefited from a decrease in prices.
"The middle class population spends a bulk of their income on discretionary items like TV, oven, etc, and therefore benefits from the price decline across these categories... Given that poor households spend higher proportion of their income on food related articles, WPI inflation understates inflation faced by poor households," a study by rating agency CRISIL said.
Several poor households had to give up on consuming dal, when prices rose, and have had to cut down on milk purchases given the rise in prices.
A top government economist said the study suggests that the government was pro-rich and anti-poor.
However, economists are not agreed on the report in totality. According to Pronab Sen, senior advisor in the Planning Commission and the former chief statistician of India, he would be sceptical about the numbers and how these had been modeled. He added savings-consumption trade-off depended on a variety of factors.
