Fintotal News Analysis | Bharat Bandh – The Fuel Price & Inflation Saga
Bharat Bandh – The Fuel Price & Inflation Saga
Ruby Jacob, 06 Jul 2007

Whats happening?

Monday, 5 July, saw a hugely successful Bharat Bandh. The usually bickering opposition unusually joined hands to bring most of the country to a halt, in protest against the fuel price hike, and inflation in general.

Whether or not we support the Bandh, we have undoubtedly seen sharp price-rise in most of our daily items - food, milk, transport, not to mention real estate. Indeed, food price-rise has been shockingly steep (the official number is about 20%). Various reasons have been peddled by the government for this state of affairs - failure of 2009 monsoon, global economic recovery, increase in crude oil prices, and now economic growth in India.

The bad news is that we dont see any let-up in the prices of food and other goods in the months to come, even if the monsoon turns out normal this year. And if there is a second consecutive deficiency in rain, God save us!

What does it mean for me?

Unfortunately, inflation is a universally bad phenomenon – it is certain to affect you one way or the other. But you can do a couple of things to minimise its impact on your savings and investments.

  • If your income hasnt seen an increase this year, you need to save a bit more. See which expenses you can cut down on.
  • Do not keep too much cash lying idle in the bank account. This is always a bad thing, but it is worse with the inflation rat nibbling away at whatever is there.
  • Real estate and gold are good investments during inflationary times. If these are in line with your overall financial diet, now is a good time to make the move. But beware of taking on floating rate loans, since rates may rise very soon.
  • Do not enter into longer duration fixed deposits or other lock-in type products. Deposit rates are very likely to rise in the next year or so, so you might as well lock in rates then

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