LOW INFLATION OPTICS AND COST OF LIVING POLITICS

THIS Wednesday, India’s ministry of statistics informed that consumer price inflation in October fell to 0.25 percent—the lowest since January 2012. Indeed, food inflation for the month dropped to -5.02 percent. The price fall is magnified by the base effect—for instance, food inflation in October 2024 was a searing 9.7 percent, distorting the October 2025 reference. For folks at home, however, claims of lower inflation seem, in the words of H G Wells, as absurd as saying solid earth was liquid.

- SHANKKAR AIYAR

The cynicism is global. Inflation is trending lower at around 2.2 percent in advanced economies (and 0.2 percent in China). Yet, public response to headlines about falling inflation across India and the world ranges from a dismissive diatribe to an honest query: why doesn’t it feel so? There is the political semantics. Politicos are quick to present the dip in rate as a fall in prices. Then there is the fact that, while the rate at which prices rise may be slower, the absolute price of household consumption items hover at historic peaks.

The optics of low inflation has catalysed global rage on the rising cost of living. Politicians understand the politics of economics—they comprehend the consequences on their popularity and power. Last week, Trump trolled those who critiqued tariffs, calling them fools, and announced a $2,000 dividend to American families. On Friday, Trump blamed Joe Biden and withdrew tariffs imposed on every country on beef, banana, cocoa, coffee, tomatoes, tea, and avocados, a popular filling in tacos. As Trump’s ratings plunge to 36 percent, the operative phrase is affordability.