Rising wages offsetting inflation pinch: Subir Gokarn
To tame inflation, the Reserve Bank since March 2010 has announced 13 consecutive rate hikes. However, inflation is still above the RBI's 5 per cent 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 percent annually for the last five years."
Addressing a management event here over the weekend, Gokarn said, it's "puzzling" to understand why the recent episodes of high inflation, particularly driven by food prices, have not evoked the kind of sharp provocation that had rocked the nation many times in the past 50-60 years.
Earlier, people indulged in "making noise not just individually but collectively in organised fashion," he said and pointed out that "wages at the very bottom-end of the labour market have been rising at a rate which more than offsets significantly, the rising costs of living.
"What that means is despite high inflation, people are actually feeling that they are better-off," said Gokarn who heads the monetary policy division at the RBI.
The headline inflation was 7.45 per cent in October. After two revisions, the RBI had projected the year-end headline inflation at 7.5 per cent. In