'Rise in cost of living in India lower versus UK, Germany since Sept'

NEW DELHI: The rise in the cost of living in India is lower when compared with the likes of UK and Germany, according to SBI Research Ecowrap.

The report said there has been a manifold jump in the cost of living across countries, with food and energy prices going through the roof as the International Monetary Fund pointed out recently.

With the central banks across countries in the midst of a rate hike cycle, the cost of owning a house in respective countries has also jumped manifold, it said. However, the good thing is that India still stands like an oasis in this era of uncertainty.

According to the latest IMF report, "Food and energy prices have been in the same phase (boom or bust) about 75 per cent for the period since 2004."

The report released on Friday said such inflation affects most economies across the world with a severe impact on lower-income groups in developing economies as in these countries, food consumes a significant household consumption expenditure. It said this has a direct impact on the cost of living in these countries and since the beginning of the Ukraine-Russia conflict, there has been a significant surge in prices across developed as well as emerging economies.

According to the report, to understand how India has performed in terms of the cost of living, in a common currency, the cost of living in India was compared with US, UK and Germany by adjusting each country's exchange rate (dollar, euro and pound in case).

It said this was to achieve parity with the rupee by allowing for these currencies' movements against the rupee and then using such converted numbers to arrive at a comparable cost of living across these countries in rupee terms only.

The report's analysis was to measure the cost of living by using a uniform measurement of prices across different countries by using the rupee as the exchange rate. The research also found that in rupee terms, if the household budget/cost of living was Rs 100 in September 2021 across all countries, it has now increased by Rs 12 in both US and India, but it has increased by Rs 20 in Germany and Rs 23 in the UK.

In terms of the increase in food prices, India performs the best, according to the report. What cost Rs 100 on September 21 across countries, is now up by Rs 25 in the US, Rs 18 in the UK, Rs 33 in Germany and Rs 15 in India, the report added.

SBI Research Ecowrap said in terms of the increase in shelter prices, India again performs the best. What cost Rs 100 in September 21 across countries, is now up by Rs 21 in the US, Rs 30 in the UK, Rs 21 in Germany and Rs 6 in India.

In terms of increase in energy prices, what cost Rs 100 on September 21 across countries, is now up by Rs 12 in the US, a staggering Rs 93 in the UK and Rs 62 in Germany and Rs 16 in India, it added.

According to the report, there has been clearly a deterioration in the cost of living in the aftermath of global mayhem, but India still performs significantly better compared with countries supposed to be the epitome of sound macro-management.

As the global economy continues to ravage through uncertainties, it thus seems that India has done quite well in managing the cost of living in comparison with other countries, SBI Research Ecowrap said.

The US job market is still quite strong and the Federal Bank may have to do a few more rate hikes to have a firm grip on the labour market. According to the report, India has remained remarkably resilient with 72 per cent of the $14.7-billion capital outflows till July 29 in 2022-23 (FY23) already been recovered. It also added Portfolio inflows in FY23 in November have been strong at $4.1 billion and are still counting.