Authors: Gautam Rekha Suryakant, Kamlesh kumar
Abstract: Inflation has become one of the most urgent macroeconomic issues of the household wellbeing of the emerging economies like India. Middle-class families are the most vulnerable of all socio-economic categories because they rely heavily on the salaried income, a certain degree of savings buffer, and often contain no particular subsidies provided to families with lower incomes. It is proposed that this research paper explores how inflation impacts the socio-economic life of the middle-class families in India due to an adequate compilation of academic literature, policy reports and macroeconomic research. The examination shows that chronic inflation is highly efficient in watering down the purchasing power, altering consumption habits, saving in addition to causing financial vulnerability. The rise in the cost of the basic necessities such as food, fuel, houses, healthcare and education has not affected the middle-income households equally because it has required that households to adjust to changes in their methods of spending and putting off long term investments. These transformations with time endanger the finance needs of these households where the saving of wealth with budgeting to live replace each other. The findings indicate that inflation reduces the real wages gains that leads to a fall in the standards of lives even though the growth in nominal incomes is experienced. The cost of houses and services is more of a challenge to the middle-class households in the city more so. Inflation is also useful in accumulating the debt levels since households resort to the use of credit instruments in order to sustain the lifestyle. This greater reliance on borrowing is a sign of a structural imbalance of the growth as well as the requirement expenditures that can expose households to the long term financial risks. Besides the economic effect, inflation causes psychological stress and shift of aspirations, this affects the general standard of living. High uncertainty is typically a cause of a decline in spending, vacillation in making life decisions and negativity of future economic success.
