As if the renewed rise in prices of petrol and diesel was not enough, the government has jacked up the prices of natural gas which has led to a spurt in prices of CNG as well as PNG. Thanks to the cascading impact of the upswing in fuel prices, there has been a disturbing rise in the inflationary price spiral. The annual consumer inflation rate shot up to 6.3 per cent in May before easing modestly to 5.30 per cent in August. But with fuel and edible oil prices on the upswing again, the inflation rate is expected to cross the crucial mark of 6 per cent shortly — the upper limit of the Reserve Bank of India’s inflation band of 2 to 6 per cent.

Incidentally, the RBI has been entrusted with the responsibility of monitoring and controlling the monster of inflation. It has been a mixed scenario during the last three months. Prices rose at a softer pace for food, tobacco, intoxicants, transport and communications, while there was a marked pickup in inflation for fuel, light, clothing, footwear and housing.

It’s a matter of some consolation that the retail inflation rate is still below the crucial level of 6 per cent, but the central bank should not pat itself for this ‘achievement’. With fuel prices resuming their upward climb and the RBI not taking any effective steps to contain the price spiral, the inflation rate can go beyond the 6 per cent level anytime. It should be remembered that by October 2020, the inflation rate had shot up to 7.61 per cent, the highest level in the last seven years.

To his credit, Prime Minister Modi had done a remarkable job of containing inflation earlier, having realised that one of the main factors responsible for the fall of the UPA-2 government in 2014 was the runaway rise in prices. In March 2016, the government entrusted the RBI with the job of controlling inflation. And inflation was indeed under control with the average inflation rate between October 2016 and March 2020 remaining low at 3.93 per cent. Interestingly, this time inflation has been in line with the wholesale price rise. The WPI has spurted to a record high of 12.9 per cent in May 2021 from 10.5 per cent in April 2021 and deflation of 3.4 per cent in May 2020. The surge in wholesale inflation is mainly due to the sharp increase in fuel and power prices which have zoomed to their highest levels in the last one decade.

Unfortunately, the inflationary price spiral has come at a time when the economy remains hard-hit by the Covid pandemic, which has administered a body blow to millions of middle- and lower-income group people who have lost their jobs and other sources of income. Rising prices of medicines, food, edible oils and pulses, coupled with the unbearable spurt in prices of petrol and LPG, have played havoc with the budget of the common man.

The Modi government cannot rest on its past laurels of having contained inflation and needs to tackle the current all-round price spiral on a war footing. If this is not done — and the inflation monster continues to terrorise the common Indian for another couple of years — all of the powerful oratory of the Prime Minister and the drum beats of his fan base may go in vain in the next general elections.