To my utter surprise, I’m coming up to completing five years of living in India. Being an expat usually means you are paid more than the local workers, and India’s strict foreigner employment laws almost guarantees that.
One of the things about living in a developing country is that there is incessant, non-stop, almost frantic, growth all around you. Go to any city in India and it’s a maze of glass cladded buildings that are going up or buildings that are earmarked for demolition to make way for a bigger, fancier shopping mall than the previous one.
Growth of this kind helps a lot of people. One thing all upper middle class and some middle-middle class families have is a maid. Some even have drivers. But as one co-worker commented: the luxury of having home help is going to come to an end very soon. The 40 year old maid that you employ has saved every last rupee to send her children to an engineering college; there’s no way those kids will be sweeping floors or driving cars for the middle classes.
The antithesis of growth is inflation. The sworn enemy of the middle class. As fast as wealth can be accumulated, inflation is there to take it all back again. In developed countries, people talk about inflation rates of 3% ruining the middle classes. In India, the official inflation rate is around 8%. In reality, I suspect it is far higher.
For the first few years in India, inflation didn’t even come up on my radar. A few rupees here, a few rupees there, it was barely noticeable. To me, inflation was something that got the daily wage workers and unions upset. There would be a strike or two, but the middle classes could suck it up and carry on. After all, what’s a few hundred extra rupees when you are earning Rs 40,000 (£465 / $745) a month?
Now it’s a different matter though. Even on a salary like mine, inflation has caught up with me. It’s something you see happening month on month. I do a monthly shop at the local supermarket. This time last year I spent around Rs 4,000 (£46 / $74) for the shop. My latest shop cost Rs 5,650 (£66 / $105) – buying exactly the same stuff. Milk has risen from 30 rupees to 62 rupees. A carton of juice has gone from 49 rupees to 99 rupees. Cornflakes from 125 rupees to 200 rupees.
It’s got to the point where the prices they print on the packaging are already out of date by the time they wind up on the shelves. Waiting in line at the checkouts takes longer now because every other item needs a price override to bump it up by another 5 or 10 rupees. Every month the price is going up, it’s inflation that hits you every time.
And yes, before I get flamed, I know spending £66 / $105 per month on groceries is laughably low compared to a developed country (the average UK grocery bill is about £144 for one person – apparently). What isn’t funny, and what developed countries haven’t seen, is the 40% inflation on food prices in the last year alone. I never used to look at prices in the supermarket before, it was all cheap so what was the point. Now it’s got to the point where I’m being a little bit more careful about what I buy.
Electricity prices is another area where inflation has crept up and made me gasp for breath. The other day, the latest electricity bill was waiting for me in my letterbox. For the same period last year, it cost me Rs 1,250 for 630 units. This year, I used virtually the same amount of units (yay!), but the price is now Rs 2,600. Again, it’s not much when you compare it to developed countries, but as I recently pointed out on Facebook, this is a staggering 115% inflation we’re talking about here.
To add salt in to the inflation inflicted wound, the state electricity board is only able to generate 70%-80% of the power required by the state. Remarkable, given that only a few years ago, the state was able to sell surplus power to other states in India. The result is that in Chennai we are now at a mandatory two hour power cut every day (it used to be one hour). Elsewhere in the state, it can be as much as 4 hours. So not only are we getting less power per day, we’re paying 115% more for it than we were this time last year.
I used to enjoy going out for lunch and dinner. It would cost about 300 rupees for lunch at the coffee shop and 800 rupees for dinner. Now lunch is around Rs 600 and dinner is a success if it comes in at less than Rs 1,400.
It’s got to the point now where restaurants have to republish their menus every six months to take in to account rising prices. I half dread seeing a new menu at my local restaurants because I know the prices will have gone up again.
To be frank, there is almost nothing India can do about inflation. Like any other country, it’s at the mercy of the international commodity and currency markets. The Indian oil companies alone are losing $36bn per year subsidizing fuel to try and keep a check on inflation. They can’t keep it up. When they run out of money – and they will very soon – petrol, diesel and LPG will have to rise to market prices, potentially triggering hyperinflation. Domestic LPG (used for gas cookers), for example, would have to double in price.
I’m not sure I want to be around when the fallout from inflation happens, because it won’t just be the daily wage workers and unions protesting on the street.