Inflation: Why Everything Feels More Expensive
Updated: May 31
Introduction
There is a particular kind of frustration that comes from standing in a grocery store, staring at a price tag, and thinking, "didn't this used to cost less?"
You are not imagining it. And you are not alone. Think about the last time you felt shocked when a restaurant bill arrived. Or checked petrol prices and mentally calculated how much more you were spending than a year ago. Or opened an online cart, saw the total, and put half the items back.
These are not isolated experiences; they are symptoms of something larger that has been quietly reshaping what ordinary people can afford.
Inflation—the general rise in prices across an economy over time—has become one of the most talked about economic forces of the last few years.
But for most people, it remains abstract. A percentage. A headline. Something economists argue about on television.
So, what it actually is, and why it makes your money feel like it's shrinking, is worth understanding.
What Inflation Actually Is
At its core, inflation means that the same amount of money buys you less than it did before. lf a cup of chai cost ₹20 last year and costs ₹25 today, that's inflation at work. The money didn't disappear but its purchasing
power did.
Economists measure this through something called the Consumer Price Index
or CPI which is a basket of commonly purchased goods and services whose price changes are tracked over time. When that basket gets more expensive, inflation goes up. When prices stabilize, it comes down.
India's retail inflation peaked at over 7% in 2022 driven by a combination of global and domestic pressures that collided in an unusually short period of time.
Why Prices Rose
The short answer is that several things went wrong at once.
The COVID-19 pandemic disrupted global supply chains in ways that took years to untangle. Factories shut down. Shipping costs skyrocketed. The supply of goods fell sharply while demand—fueled by government stimulus and pent-up consumer spending—surged.
When supply falls and demand rises, prices go up. That is not a theory. That is arithmetic.
Then came the Russia-Ukraine war in 2022, which sent crude oil and food commodity prices soaring globally. India, which imports over 85% of its crude oil felt this immediately. Higher oil prices don't just make petrol expensive, they make everything expensive, because fuel is embedded in the cost of producing and transporting almost every good you buy.
Add to this a weakening rupee, which made imports costlier, and you have the ingredients for a sustained price rise across categories.
Why It Feels Worse Than The Numbers Suggest
Here is something the official inflation figures don't fully capture: inflation doesn't hit everyone equally.
The CPI measures average price changes across a broad basket of goods. But if you spend a larger proportion of your income on food, fuel, and rent, as most middle and lower income households do, your personal inflation rate is higher than the headline number suggests. The things that take up the most space in everyday budgets are often the things that rose the most.
There is also a psychological dimension. Research in behavioral economics consistently shows that people feel losses more acutely than equivalent gains. Paying more for something you used to afford comfortably registers as a loss and that stings in a way that a percentage point statistic simply cannot convey.
What Controls Inflation
The primary tool governments and central
banks use to fight inflation is interest rates. In India, the Reserve Bank of India raised its benchmark repo rate multiple times between 2022 and 2023, making borrowing more expensive. The logic is straightforward — when credit is costlier, people and businesses spend less, demand cools, and prices stabilize.
It works. But it takes time, and it comes with trade-offs. Higher interest rates also slow economic growth and make loans for homes, businesses, and education more expensive. Fighting inflation is rarely painless.
Where Things Stand
India's inflation has moderated significantly from its 2022 peak, but the prices that rose have largely not come back down. That is the nature of inflation—it is not a wave that recedes. Once prices rise, they tend to stay risen. What improves is the rate at which they continue rising, not the prices themselves.
This is why everything still feels expensive even when economists say inflation is under control.
They are right, and so are you.
The Takeaway
Inflation is not a conspiracy. It is not arbitrary. lt is the predictable result of supply, demand, policy, and global events intersecting in real time and its effects land differently depending on where you sit in the economy.
Understanding it doesn't make your grocery bill smaller. But it does make the frustration slightly more manageable when you know what vou are actually dealing with.
Sources
Written by Alisha Nasim. Image from Pinterest.
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