Poor households in India face higher inflation volatility than the rich, widening economic inequality, necessitating urgent policy intervention.
Authors
Rohan Bansal, The Reserve Bank of India, Mumbai, India
Prachi Bansal, Assistant Professor, Jindal School of Government and Public Policy, O.P. Jindal Global University, Sonipat, Haryana, India
Summary
This paper is a first attempt to track the inflation rates of the distribution of Indian households based on consumption weights of different fractiles of rural and urban households from 2015 to 2023. Computing the consumption expenditure shares of different fractiles of Indian households—from the poorest to the richest—and the inflation faced by them, we show that the volatility of inflation is higher for the poor vis-à-vis the rich households and has persistently remained higher for the poor households. This paper argues that this inequality of inflation and high volatility is anti-poor and requires immediate policy intervention.
Published in: Economic and Political Weekly
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