Rising Prices have resulted into chaos into MIddle Class People


Rising Prices have resulted into chaos into MIddle Class People: There is no denying the fact that the Indian economy is one of the world’s largest economies. It has recently superseded China as the fastest growing large economy and ranks third in Gross Domestic Product in terms of Purchasing Power Parity. While these statistics are good, the Indian economy is also facing many challenges, one of which is rising prices.

Causes of Rising Prices

The factors that cause prices to rise are twofold – internal and external.

  • External – Global inflation is an external cause of price rise. When the prices of certain goods abroad are higher, importing these goods costs more. This increased cost is passed on to the consumer directly and indirectly. For example, when oil prices rise globally, it becomes more expensive to import oil. In turn, this affects the prices of oil products such as petroleum and diesel in our country. The consumer then has to pay higher prices to get these products. Since these are products that are used in transportation, costs of goods being transported also increase. Therefore, goods such as foodstuffs and other necessities also become more expensive.
  • Internal – These are factors that are caused by the economic and political situations inside the country. There are various internal factors that cause a hike in prices. Some of them are:
    • Rapid Population Growth – An increasing population demands an increasing amount of goods. Demand increases and supply can’t keep up, thus driving the prices higher.
    • Income Increase – As the purchasing power of the population increases, the demand for goods and services also increases. Again, the demand outstrips the supply and prices go up.
    • Insufficient Agricultural Output – Thanks to a growing population and increase in purchasing power, the demand for agricultural goods has increased. However, because this sector has been neglected to a significant degree, it cannot keep up with the demand. A drought or a flood is enough to disrupt supply and increase prices.
    • Insufficient Industrial Production – The industrial sector has fared better at the hands of the government. However, industrial growth rate has only increased in the last 30 or so years. Therefore, certain industrial products such as basic consumer products and agricultural and industrial inputs have not been able to keep up with the demand which has resulted in a price hike.

Effects of Rising Prices

An increase in prices inevitably affects the lives of the general population. When the prices of basic goods such as food increase, people who are living just above the subsistence level slip down below the poverty line. It also affects the pockets of the population that has fixed incomes. Prices go up but their wages remain the same and, therefore, they are either forced to spend more or give up certain goods entirely. The rich are not really affected by the price rise and therefore, the gap between the rich and the poor widens almost daily.


Price rises aren’t affected only by what’s going on in the country but also by the situation across the world. While certain factors aren’t under anyone’s control, it is imperative that governments act upon what they do control to cap huge price hikes.

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