Inflation in services more evident than merchandise: ASSOCHAM study 12/08/2014

Inflation in services more evident than merchandise: ASSOCHAM study
12/08/2014 12:43
Country’s middle class are staggering on rising inflation with prices of basic services rising by at least 25 per cent year-on-year outpacing the escalation in cost of merchandise goods, according to ASSOCHAM study. "Costs of services such as education including coaching, health, transport, servicing of personal vehicles, personal care services are increasing at a much higher pace (as compared to the WPI & CPI), pinching an average middle class family at least 25 per cent more year-on-year," the study said. The study by industry body Assocham covered essential services like transportation, education and healthcare. High costs would affect sectors like IT (information technology), banking, healthcare and education. It found that excessive increase in prices of essential services consumed by the average city households among the middle class has also made the consumers "frown upon" paying the service tax, which is becoming more and more important for the general exchequer. The high cost of consuming services would also mean shelling out more taxes since the levies are ad valorem and not specific, Assocham said. "Rising costs of services which claim bulk of the middle class budgets are going to exert pressure on salaries...," Assocham Secretary General D S Rawat said. Analysing the cost of healthcare, the study estimated that the doctors' fee, cost of tests and hospitalisation charges have gone up 70-100 per cent during the past 5 years. "With services accounting for over 65 per cent of the GDP, the key lies in checking the costs. Else, the advantage of even the arbitrage between the cost of employing workers in India and Western nations may bridge, posing challenges for crucial sectors like IT," he added.