Inflation rate is rising at a quicker pace than the wages of the consumers

04/03/2008 15:06

RBF reported inflation to be at 7.4 percent in January, the highest rate since 1998.

The Consumer Council is concerned that the inflation is rising at a quicker pace than the wages of the consumers. People are complaining about prices going up, whereas their wages has remained same. Lately prices of essential commodities such as flour/sharp, chicken, gas, dairy products, vegetables etc have risen sharply contributing to increase in inflation rate.

Inflation hurts the poor more than the rich. Therefore, it is essential that we ensure that the poor are not adversely affected by high inflation, particularly that of basic items of consumption. However, high consumer prices have affected all social classes, but especially those in the low-income bracket, who are still anticipating even higher prices for the goods they rely on most. This is a matter of social priority and it concerns the survival of over 34% of our population that lives below poverty line that is more than 289,000 people. We have also noticed an increase in the number of people going house-to-house asking for food and money.

Inflation today is caused more by the global factors. Signs of the impact of the US economic slowdown on the global economy are already noticeable. Inflation hurts the standard of living because we have to pay more and more for the same goods and services. If our income does not increase at the same rate as inflation, we will find our standard of living declining.

People living off a fixed-income, such as retirees or pensioners, see a decline in their purchasing power and, consequently, their standard of living. In other words, their savings will buy less and less, so they will need to save more and more.

Under such circumstances, counter-inflation naturally becomes the government’s primary goal. Even though soaring prices have affected the lives of the low-income group, the government should be responsible for relief and subsidies. The Ministry of Finance did step in last year to ease consumer burden by controlling price of essential food items.  The Council urges the government to control inflation rate because it is related to poverty reduction efforts and the consumer’s purchasing power.