All you need to do is look at your monthly grocery bill and it’s clear that inflation is a real problem. But the headline numbers tell only part of the story. The regular wholesale price index that is quoted in the press covers the cost of goods—from food to fuel.
The index does not capture the rise in prices of services such as health, education or telephony. So, the decision to set up an official committee of economists to develop a services price index is truly welcome. An average Indian spends most of his money on goods. Food accounts for around 43% of consumer spending. The poor spend even more of their meagre incomes on food.
But this is bound to change as incomes increase. India is just a year or two away from being defined as a middle-income country by the World Bank. Higher incomes inevitably ensure that families spend more on services like education, health, communications and even entertainment. This is what has happened across Asia.