NEW DELHI – Real inflation felt by India’s poor is 40 basis points higher than the official number in the current fiscal year, eroding purchasing power of a vast section of the South Asian nation’s population, according to India Ratings & Research, the local unit of Fitch Ratings. 

“The effective inflation faced by the bottom 50 per cent of the population stood at 7.2 per cent during April-December,” India Ratings analyst Paras Jasrai wrote in a report on Monday. 

India’s headline inflation remained above the central bank’s target ceiling of 6 per cent for the most part of last year due to high food prices, which comprise about half of the inflation basket. Price gains breached the Reserve Bank of India’s (RBI) 2 per cent to 6 per cent mandate again in January after moderating for three months. 

To contain price pressures, the government curbed exports of key grains such as wheat and rice, while the RBI has raised borrowing costs by 250 basis points since May last year. The central bank is seen hiking interest rates further in its April monetary review.

Real inflation experienced by the top 50 per cent of the population at 6.9 per cent, as shown by the research, was marginally higher than the official average of 6.8 per cent in the nine months to December. 

“As we move up the expenditure strata, the share of food and beverages in the consumption basket keeps declining and hence the intensity of inflation being faced by them also keeps declining,” Mr Jasrai said. BLOOMBERG