From dosas to airfares: how the distant war is making your cost of living expensive

It doesn’t quite feel like summer holidays when even simple plans demand second thoughts and over-planning. You step out to your favourite neighbourhood dosa joint, only to be told they’re serving only idlis today, well, because dosas consume more LPG. Your afternoon filter coffee jolt now costs ₹5 more, a sharp 25% jump from the usual ₹20, LPG crises again. And suddenly, travel plans that once felt exciting now feel uncertain and scary.

West Asia may well be the epicentre of the ongoing war involving Iran, the US and Israel, but its ripple effects are already global and intensifying. While we’re nowhere near the disruptions of the pandemic, this is a moment to prepare for volatility. It’s sensible to pause big discretionary spends, reassess your emergency fund (aim for at least six months of expenses), and ensure your insurance, especially for health and for your big-ticket assets, is active and adequate.

What’s already becoming evident, however, is the rising cost of travel, which is also reeling under the war in West Asia that’s disrupted oil and gas supplies. Aviation turbine fuel (ATF) prices have surged. Air routes are being rerouted around restricted airspace increasing flight durations and operational expenses. At the same time, demand on some international routes is softening as higher ticket prices make travellers rethink plans. The impact is visible: fares on busy domestic routes have risen by about 15%, while international travel costs are up by nearly 30%, and this may not be the peak. Against this backdrop, Ananya Grover explores how travellers can stay ahead of the curve by booking early, opting for flexible fares and prioritising options with free cancellations or easy date changes to soften the blow of rising airfares.

Navigating uncertainty isn’t the only challenge ahead. The summer months also bring a predictable surge in household expenses, as people tend to spend more for comfort. Quick and inexpensive auto rides are replaced by air-conditioned cabs, air conditioners run all day long, adding to electricity bills, and mall visits become more frequent, all of which increase overall consumption.

As the season transitions toward the monsoon, another layer of expenses emerges: vector-borne illnesses, viral infections and seasonal flu become more common, adding another expense-head of medical bills. In this context, Ann Jacob outlines the range of expenses that typically spike during the summer and offers practical ways to prepare for them throughout the year, so you don’t end up feeling the heat of rising expenses as the temperature soars.

In the investment space, there’s an interesting proposal floated by the Securities and Exchange Board of India (Sebi). Taking a cue from Association of Mutual Funds in India (Amfi), Sebi has, in a recent consultation paper, proposed introducing Gift Prepaid Payment Instruments (Gift PPIs). Think of these as prepaid gift cards, like your Amazon vouchers, that can be purchased, gifted, and redeemed exclusively for investing in mutual funds. Jash Kriplani walks you through the details in this story: what recipients can do with these cards, how they can choose a mutual fund and the limits applicable per card. While gifting a mutual fund is not new, loading it on a pre-paid gift card is going to make entry easier for investors, especially in smaller cities. Read the story for more details.

While the investment space is experimenting with gift cards to nudge individuals towards mutual fund investing for long-term wealth creation, the home loan industry too has been innovating with various loan structures to make it easier to purchase big-ticket assets like homes, even when affordability remains a concern.

One such offering is the low-upfront-cost or subvention scheme promoted by real estate developers. On the surface, it makes buying a home seem more affordable, but it effectively shifts a significant portion of the cost to later stages of the payment cycle. The structure is simple: you make a down payment on an under-construction property, and the developer takes a loan on your behalf to fund the rest of the project. You don’t pay EMIs during the construction phase but interest starts accruing immediately from day one. By the time you take possession, the principal outstanding has already ballooned due to the accumulated interest. And the downside isn’t limited to higher EMIs. Your credit score could be at risk if the developer defaults on payments. Worse, if the project is delayed, the interest continues to compound further inflating your liability. In this story, Khyati Dharamsi breaks down the risks associated with such subvention schemes and what homebuyers should watch out for.

And finally, a must-read regardless of where you are in life. Whether you’re Gen Z, with a short-term horizon and little thought for retirement, part of the sandwich generation juggling growing children and ageing parents or someone nearing retirement, this concerns everyone.

For most, retirement math seems straightforward: take your current expenses, remove age- and stage-related costs such as education or housing and then inflate the remaining number to estimate future needs. But while we subtract certain expenses, we often forget to add others.

One critical and fatal miss in this equation is the cost of healthcare beyond hospital visits and medical bills: this is the cost of caregiving and rehabilitation. It’s a silent but rapidly growing expense that many seniors face today, and by extension, their families. Insurance typically doesn’t cover it and most people don’t plan for it until a chronic condition makes long-term care unavoidable. At that point, families scramble to arrange caregivers, modify homes and manage daily logistics all of which add up quickly. These costs are only set to rise as more families shift to nuclear setups. That’s why caregiving expenses need to be a core part of retirement planning, not an afterthought. In this story, Shipra Singh speaks to families currently navigating the burden of caregiving, driving home a simple but crucial point: the cost of care in old age must be factored into your retirement plan.

In this week’s interview with the expert, Shipra Singh spoke to Madan Sabhnavis, chief economist at Bank of Baroda to make sense of how the ongoing war is likely to impact the growth story and in turn households. While Sabnavis dispelled possibilities of any recession, households may have to face the impact of inflation. The job market too may see some sectoral disruptions, and young earners may have to start off on modest salaries.

And this brings me back to the start of my newsletter: don’t panic, but stay prepared.

Until next week!