Inflation - points to ponder over !

After corruption, the next hot topic for among general public in India has to be Inflation. Be grandfathers talking of how they used to get Rice at Rs 1/kg or the housewives nagging over the price of Onions or potatos....(The recent diesel/lpg/kerosene price hikes have only added more fuel to the fire :),inflation effects one and all. Just that the effect is more profound on some sections of the society than other and the effects are so subtle that sometimes you don't notice this at all.

Consider this example (taken from a article I was reading in a business magazine a few days back). Your regular office parking guy charges 1000 bucks for a month to let you safely park your car at your reserved place.(Yeah yeah I know only a privileged few get this honor and BTW this is not my office I am talking of. Parking in my office is free provided you reach early enough to get one ;)) Now say he raises his rate to 1200. You being the privileged guy will say.. 200 bucks wat the heck.. I will pay and get going. But did you even notice that that's a 20% increase in parking ( remember inflation in India is still hovering around a "high" 8-9%.)And now this guy is collecting this 20% increase not just from you but from many others like you. So the money multiplier effect kicks in since the parking management now has 20% more disposable money at hand.

Which raises the question .. Is inflation (especially food and essential commodities) in India a supply driven or Demand Side driven? My guess it is combination of the two. So what can we collectively do about inflation (apart from fretting about it and blaming the government for it). Here are some things I can think of.

Reduce Wastage of Food: Food contributes the maximum points to inflation numbers in India currently. So reduce the food wasteage both from supply side and demand side

Demand Side: Consider one example here. My office cafeteria used to offer free food during lunchtime to all employees till the month of May. After finishing up the lunch, like in most corporate cafeterias, we are supposed to empty our leftovers from the plates into a bin and then put the plates for wash. The Bin would usually become full - with most people taking more than what they can eat and throwing the stuff into the bin. On a given day, the facilities guys said that they have 2 full bins of food leftovers only. However from the month of June, the Company decided to stop giving free food and instead asked the employees to start buying food by paying. Guess what -- most people starting getting lunch boxes from home and the bin which would usually overflow was not even 1/4 full !!!! . Imagine the affect on the food demand if all the corporate and government offices adopt this approach or at least ask people not to waste food !!

Similar demand side changes can be effected at homes. Usually moms cook more rice or food in general at home - the thinking being that if someone is more hungry than normal - he should not be left wanting. But this leads to is huge wastage of cooked rice and food everyday at home. (I am sure most middle class Indians can relate to this). Instead the moms and ( the cooks for the working modern moms) can take a step back and ask the people at home how much hungry they are - that would help reduce some consumption led demand as well.

Supply Side: Encourage organized retailers like Reliance, More etc. They have a strong supply chain and logistic support system which will help from reduce wastes during transportation and storage. Today Food Corporation of India(FCI) godowns/granaries are full but still the food prices are not going down simply because of the lack of the proper supply chain and distribution mechanisms. Not to mention that most godowns have poor storage standards and with Rats/Rodents infesting most of them. (That this is allowed by the FCI officials points to the another nexus - the corrupt FCI guys say that x kg of grains was eaten away by the rats and then sell these x kgs in the open market to distributors and retailers)

So the question is - what can you as a consumer do to control price raise and inflation? Think about it. There are many things we can do (like -do not rip your cars and bikes on road. Ripping decreases you fuel efficiency thereby increasing overall fuel consumption and demand). Can you think of more such ways? Simple but profound innovations??