Real inflation is 10% or more: Hedge fund manager says middle-class Indians hit hardest

Hedge fund manager Akshat Shrivastava on Monday said that while official data pegs India's retail inflation at just 2.07%, the middle class is dealing with a much higher cost of living, with expenses on essentials rising by at least 10%.

"Official Inflation in India is 2.07%. But, school fee, rent, food etc all goes up at least by 10%,” Shrivastava wrote X. "So why this disparity? Inflation means rate of change of prices. A better question to ask is: for whom exactly?"

He broke it down by pointing to subsidies and social schemes that shield a large share of the population. "Nearly 81.35 crore Indians (roughly 58% of the population) receive free food grains. Around half of all school-going children are enrolled in government schools that offer free education. And, around 86-87% of the population in India own their own house."

"The real inflation (10% or more) actually hits middle/upper-income urban Indians, who rely more on private schools, rental housing, and non-subsidized goods," he added.

Shrivastava's remarks come just days after government data showed retail inflation rising to 2.07% in August, up from 1.61% the previous month, after a nine-month decline. Inflation had last peaked at 3.65% in August 2024.

The National Statistics Office (NSO) attributed the uptick to “an increase in inflation of vegetables, meat and fish, oil and fats, personal care and eggs.” Food inflation in August stood at (-)0.69%, indicating cheaper cereals, pulses, and sugar offset the rise in perishables.

The Reserve Bank of India has a mandate to keep inflation at 4%, with a tolerance band of 2% either way.

Former RBI Governor Raghuram Rajan too has cautioned that headline numbers may not capture the lived reality of price pressures. "Are we calculating our inflation properly? And it turns out when you talk to economists that there are problems with the way we calculate inflation because it doesn't truly reflect the inflation that we should be using," Rajan said in a podcast conversation.