HIGH COST OF LOW LIVING

We all have been paying a lot more for all our day-to-day needs – be it veggies or oil or any commodity. And then the macro data comes in saying that inflation is within RBI’s target.

None of thus rung any alarm bell; thus its good that Amit Syngle, managing director and chief executive officer of India's largest paint maker, Asian Paints, sounded alarmist at the post-earnings conference call yesterday. He said exactly what we all have been thinking but not really said it aloud, “Inflation is at unprecedented levels, we haven’t seen this kind of an inflation in material prices at least in the last 40 years.” And he was not alone; prior to this, HUL and Nestle, both had warned of high inflation in raw material prices.

So, we have bumper crops and rainfall has been bountiful and factories have started running at capacity once again. There is abundance and yet, we are paying a high price for everything? How does this work?  Supply bottlenecks are for real and it will take a while for things to normalize – but that alone cannot be the reason.

Yes, globally too prices are on a boil and we are seeing a reflection of the same here too. But then prices are up because demand has bounced back at a rate which is more than what anyone ever expected and the world was caught completely unprepared.

But at the crux of all the reasons – in India at least, it is the huge cost of fuel. Fuel is something which moves life – literally. Be it making or moving or selling the product, without transport nothing can happen and for transport, its ultimately the cost of fuel which decides it all. So, when we have such a high cost of petrol and diesel, thanks to the taxes, how can we ever control inflation? Even if cost of veggies and other things go down, we will always pay more for the transport. Thus in a way we are paying twice for the fuel – one directly and another indirectly.

Our Editor, Mr SP Tulsian had warned everyone about this exactly a month ago - https://www.sptulsian.com/f/mg/Caution-On-Commodity-Stocks-Seen-Ahead

Paradox of life – the cost of living is constantly growing but the demand for it does not fall…..yes, we are today paying the price for a high cost of low living.