Explaining inflation to your boyfriend
Live MintThe sun began to set over the Juhu beach. The more value the rupee loses, the more expensive the imports become and this feeds into retail inflation.” “Can’t anything be done to prevent the rupee from losing value?” he asked. “It’s the rate at which the RBI lends to banks.” “And how does raising the rate help?” “As RBI raises the repo rate, the banks also start raising interest rates. “So, tell me something…the difference in EMIs for a two-wheeler loan would be even lower?” “Yes, you are right.” Inflation maths You know, now that we are talking, I had another doubt.” “Tell me.” “How can there be one rate of inflation for the whole nation?” “Interesting question.” “Oh, I don’t ask dull questions, my dear,” he said in a slightly flirty tone, on what was originally supposed to be a romantic date by the sea. Two, it won’t be of any use.” “Hmmm.” “The government tries to calculate the rate of inflation of what it thinks is the consumption basket of an average Indian.