Rising wages offsetting inflation pinch: RBI

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SummaryHigh inflation may not be generating the same kind of “unrest” that it used to in the past as rural wages have been rising at a faster clip annually for the past five years, Reserve Bank deputy governor Subir Gokarn has said.

High inflation may not be generating the same kind of “unrest” that it used to in the past as rural wages have been rising at a faster clip annually for the past five years, Reserve Bank deputy governor Subir Gokarn has said.

To tame inflation, the Reserve Bank since March 2010 has announced 13 consecutive rate hikes. However, inflation is still above the RBI’s 5% comfort levels.

“Why is high inflation not generating same kind of unrest or outrage that it used to historically?” Gokarn said, adding that “an important answer to this could be that rural wages have actually been rising by about 20% annually for the last five years.”

“We have to see that it is matched by proportionate increase in productivity which can help control inflation,” he said, adding this has hurt the inflation situation.

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