A state of total panic at Indian market

My mom told me the other day, that “just one drop of mustard oil for cooking and not dream of having any special dishes in the weekends/ of having meat and fish anymore”.
An old Chinese proverb- “crisis is opportunity”.
The middle and upper-middle class honeymoon with a blooming economy is coming to an end; the reason behind all this being the panic at the market’s coming overall growth of the economy slows down.
The stock market has already pressed the panic button – sensex and nifty reading their lowest levels in 2008.
As poor and middle class consumers are discovering every day, inflation is the most that hurts them all the most.
Already he is feeling the pinch, be it in the high price of food commodities, transport, electronics and other essential/ daily needs.
Inflation is the sustained rise in the general price level as a result of an increase in demand without a corresponding increase in supply.
The only consolation is India is not alone in its suffering. Other emerging markets in Asia have been hit equally hard. Sri Lanka, Pakistan, Vietnam and Indonesia too, has inflation in some cases even higher than India.
What has caused the inflation?
Ø Phenomenal rise of worldwide oil prices.
Ø Foreign investment in real estate.
Ø Food situation.
Ø Steel prices have raised leading to speculation in commodities.
Ø Poor Infrastructure.
There are no easy answers. Many inflation watchers started perhaps by the double digit figure say that we must live with high prices all through the year and that is the least we can expect.
The current inflation is imported and fuelled by speculation. Rich countries are exporting inflation to us. They no longer wish to invest their money in manufacturing assets. That work has been out sourced to china, India and other countries. Their idle funds are being used for speculation and for investing in commodities. We cannot fight such imported inflation by increasing domestic interest rates or reducing domestic money supply while giving a free run to foreign money supply. That would result in stagnation of economy.
For middle class consumers, double digit inflation is a time for serious belt- tightening along with better financial planning.
For the middle class, this is a time to do some financial planning try and pay off expensive loans for durables, to cushion the rise in home loan interest rates if possible they should partially prove pay home loans as well. A fixed deposit that yields an interest 8.5 to 9 percent annually is of no use when inflation rate is over 10 percent.
Remember, just as good times don’t last forever, bad times come to an end as well.