The tyranny of COVID-19 has brought both the developing and advanced nations on their knees. The federal agencies across the globe have not only been dealing with the health crisis but also the economic crisis triggered in the wake of COVID-19 induced lockdown of the world economy.
This is an interesting note/letter on inflation and how we measure it. I have long been suspicious of government published inflation measures and the connected explanation of policy measures and the subsequent actions of the business world. Before I make my comments and perhaps expose my naiveté of the subject, I would like to declare that I am not an ‘economist’ and never want to be one. First of all, I am pleased that you addressed the fallacy of one measure fits all when it comes to inflation. This is true even in the US where my experience and thoughts have been shaped and formed for over 40 years now. Inflation is different for different sections of the population. Inflation of goods and services that a common man in the lower economic strata (earning power and wealth) sees and experiences are very different than those is higher rungs. As a percentage of earning power inflation has much nastier effect in the bottom groups. Broad based inflation measure drive certain actions such as income increase, which often doesn’t cover the actual cost of living increases. This further exacerbates income disparity and wealth accumulation, which has been growing since the 70s with no sign of abatement. India seems to be exhibiting the same pattern. Perhaps, the broad based inflation measure should further split and weighted on multiple parameters including income. I would love to see smart people like yourself will look into this further. I would like to hear if work along these lines has been done in the past. Best,.. S. Bette (sbette@gmail.com)
This is an interesting note/letter on inflation and how we measure it. I have long been suspicious of government published inflation measures and the connected explanation of policy measures and the subsequent actions of the business world. Before I make my comments and perhaps expose my naiveté of the subject, I would like to declare that I am not an ‘economist’ and never want to be one. First of all, I am pleased that you addressed the fallacy of one measure fits all when it comes to inflation. This is true even in the US where my experience and thoughts have been shaped and formed for over 40 years now. Inflation is different for different sections of the population. Inflation of goods and services that a common man in the lower economic strata (earning power and wealth) sees and experiences are very different than those is higher rungs. As a percentage of earning power inflation has much nastier effect in the bottom groups. Broad based inflation measure drive certain actions such as income increase, which often doesn’t cover the actual cost of living increases. This further exacerbates income disparity and wealth accumulation, which has been growing since the 70s with no sign of abatement. India seems to be exhibiting the same pattern. Perhaps, the broad based inflation measure should further split and weighted on multiple parameters including income. I would love to see smart people like yourself will look into this further. I would like to hear if work along these lines has been done in the past. Best,.. S. Bette (sbette@gmail.com)