India's increase in the cost of living far better than UK, Germany: SBI Report
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New Delhi, Dec 03: Since September 2021, the cost of living in India has increased at par with the US, while it has fared better when compared to Germany and UK, revealed a report from the State Bank of India’s Economic Research Department. The report – Cost of living in common currency/rupee in India vis-à-vis US, UK, and Germany shows the least increase since Sep’21.
To capture how India has performed in terms of the cost of living, in a common currency, the report compared the cost of living in India with the US, UK, and Germany by adjusting each country’s exchange rate (dollar, euro, and pound in our case) to achieve parity with the rupee by allowing for these currencies movements against rupee and then using such converted numbers to arrive at a comparable cost of living across these countries in rupee terms only.
“Our analysis was thus to measure the cost of living by using a uniform measurement of prices across different countries by using rupee as the exchange rate," said Soumya Kanti Ghosh, Group Chief Economic Adviser, State Bank of India, in the report. The findings show that if the household budget was ₹100 in September 2021 across all countries, it has now increased by ₹12 in both US and India, but it has increased by ₹20 in Germany and ₹23 in the UK. India has performed the best in terms of increases in food prices and shelter. To talk about food prices, which cost ₹100 in Sep’21 across countries, now is up by Rs. 25 in the US, ₹18 in the UK, ₹33 in Germany, and ₹15 in India, as per the report. For shelter the report showed that what cost ₹100 in Sep’21 across countries, is now up by ₹21 in the US, ₹30 in UK, ₹21 in Germany, and ₹6 in India. Energy prices are one area where India lagged behind the US. “In terms of increase in energy prices, what cost ₹100 in Sep’21 across countries, is now up by Rs. 12 in the US, a staggering Rs. 93 in UK and Rs. 62 in Germany, and Rs. 16 in India," the report said. “Clearly, there has been a deterioration in the cost of living in the aftermath of global mayhem, but India still performs significantly better compared with countries supposed to be the epitome of sound macro management," Ghosh said.
At a time of economic uncertainty and looming recession in advanced economies, India has done well in managing the cost of living in comparison with other countries. “The US job market is still quite strong and the Fed may have to do a little more rate hikes to have a firm grip on the labor market. India has remained remarkably resilient with 72% of the $14.7 bn capital outflows till July 29 in FY23 having already been recovered. Portfolio inflows in FY23 in November have been strong at $4.1 bn and are still counting," Ghosh added.