Every few months, the Reserve Bank of India releases inflation numbers that sound reassuring.
Inflation is “moderating.”
Price pressures are “within tolerance.”
The outlook, we’re told, is stable — with a watchful eye.
Yet for most households, none of this feels true.
Daily expenses remain stubbornly high. Grocery bills haven’t eased in any meaningful way. Rent, school fees, healthcare — they all continue to stretch budgets. For small business owners, margins feel tight. For salaried professionals, saving is a must.
So it’s only natural that people are asking a blunt question now: why inflation still feels high in India, even when official data says it’s under control?
This isn’t a misunderstanding. And it’s not public ignorance. It’s a gap between policy math and lived reality — one that deserves a clearer explanation.
“Inflation may be slowing, but household budgets are still catching up.”
What the RBI Means When It Says “Inflation Is Under Control”
To understand the disconnect, we first need to understand what the RBI actually measures.
India’s official inflation number is based on the Consumer Price Index (CPI). It tracks price changes across a basket of goods and services — food, fuel, housing, clothing, education, healthcare, and more.
When RBI officials say inflation is under control, they usually mean:
- CPI inflation is close to the 4% target
- Price increases are not accelerating sharply
- Major supply shocks are absent (for now)
From a policy standpoint, this matters.
From a lived experience standpoint, it often doesn’t.
Because CPI measures average price movement, not personal financial stress.
The Difference Between “Slower Inflation” and “Lower Prices”
Here’s the part that gets lost in most public discussions.
Inflation coming down sounds comforting, but it doesn’t mean prices are actually falling. It only means they’re rising more slowly than before.
It only means prices are rising more slowly than before.
If groceries went up 10% last year and 5% this year, inflation has “cooled.”
But your grocery bill is still much higher than it was two years ago.
For households already stretched thin during the high-inflation phase, slower inflation offers little immediate relief. The damage has already been done.
This is where official optimism collides with household reality.
Why Inflation Still Feels High in India at the Household Level
Another uncomfortable truth: not all inflation feels equal.
The RBI may look at a broad basket, but households spend disproportionately on essentials.
Let’s break that down.
Food Inflation: Volatile, Visible, Emotional
Food prices are volatile by nature. Even when headline inflation softens, food inflation can spike suddenly due to weather, supply chain issues, or global commodity movements.
You don’t notice lower inflation in theory.
You notice higher prices at the vegetable market.
Food inflation hits lower- and middle-income households hardest because food forms a larger share of their spending.
Housing Costs: Quiet but Relentless
Rent inflation doesn’t grab headlines, but it quietly drains monthly budgets.
Urban rents, in particular, have shown little willingness to cool.
Migration, limited supply, and rising maintenance costs keep upward pressure intact.
The CPI reflects housing costs imperfectly. Tenants feel them fully.
Healthcare and Education: The Silent Inflation
Healthcare and education inflation often outpace headline CPI.
School fees, coaching classes, and medical tests — these don’t fluctuate much downward, ever.
Once prices rise here, they tend to stick.
Official Inflation vs Real-Life Inflation
There’s a term economists sometimes avoid using publicly: perceived inflation.
Perceived inflation is not about data errors.
It’s about how people experience price changes.
When essentials rise faster than discretionary items, inflation feels higher — even if CPI suggests moderation.
For example:
- You may save on electronics or gadgets.
- But you cannot opt out of food, rent, transport, or healthcare.
This creates a psychological gap between policy comfort and public frustration.
And frankly, that frustration is justified.
What This Means for Small Businesses
Small business owners sit at the worst intersection of this reality.
Input costs may stabilise on paper, but margins remain under pressure because:
- Customers resist price hikes
- Operating costs stay elevated
- Credit remains expensive
Even as inflation cools, interest rates remain high, limiting breathing room for MSMEs.
From a business perspective, this phase feels less like relief and more like a prolonged recovery slog.
Is the RBI Wrong? Not Exactly.
It’s important to be fair here.
The RBI’s job is to prevent inflation from spiralling out of control.
On that front, it has largely succeeded.
India avoided:
- Runaway inflation
- Currency instability
- Extreme interest rate shocks
That deserves recognition.
But controlling inflation is not the same as restoring purchasing power.
And that distinction matters — politically, economically, and socially.
According to the official inflation data released by the RBI, headline CPI has moderated in recent months.
Why Rate Cuts Don’t Come Quickly
Many people wonder: if inflation is under control, why aren’t interest rates coming down?
The answer is caution.
The RBI knows inflation has a habit of returning quietly, especially through:
- Food price shocks
- Global oil movements
- Currency volatility
Cutting rates too early risks undoing the hard-won stability.
From the RBI’s perspective, a little pain today is better than full-blown chaos tomorrow. For households, though, that logic feels distant.
From a household perspective, that’s cold comfort.
The Middle-Class Squeeze Is Real
Perhaps the most under-acknowledged consequence of this phase is the middle-class squeeze.
- Salaries have not risen at inflation-adjusted levels for many
- Tax relief remains limited
- Lifestyle costs have reset upward
The result is a feeling that progress has slowed — even for those who are technically “doing okay.”
This emotional dimension rarely appears in inflation charts, but it shapes consumer behaviour more than policymakers like to admit.
So, Is Inflation Really “Under Control”?
Technically — yes.
Practically — not yet.
Inflation has slowed, but price levels remain elevated.
Household balance sheets are still adjusting.
Confidence takes longer to recover than data points.
The RBI’s numbers tell one story.
Daily life tells another.
Both can be true at the same time.
What to Watch Going Forward
Instead of obsessing over headline inflation alone, a few indicators matter more for real relief:
- Sustained food price stability
- Rental inflation moderation
- Gradual interest rate easing
- Wage growth catching up with past inflation
Until these align, the feeling of expensive living will persist — regardless of what official statements say.
Final Editor’s Note
Inflation control is a marathon, not a milestone.
The RBI has slowed the runner, but the finish line — where people feel relief — is still some distance away.
Policy success does not always translate into personal comfort overnight.
And acknowledging that gap is not pessimism.
It’s realism. Until essential costs stabilise meaningfully, the question of why inflation still feels high in India will remain far more relevant than monthly data releases.
For households and businesses alike, the challenge now is endurance — not celebration.
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