Dear Readers,

There is a good chance that the next time you pick up a box of jalebis or samosas, our indulgent favourites, you might find a warning label attached. Yes, that is correct. Our beloved snacks are being flagged for their high levels of unhealthy ingredients. And while our love for jalebi and samosa is hard to replace, perhaps this is the nudge we need to begin making healthier choices. Thankfully, that might be a little easier now, with vegetable and fruit prices either falling or remaining stead y.


This week also brought some encouraging news on the economic front. The Consumer Price Index (CPI) inflation fell to 2.10 percent, much lower than anticipated. This marks the lowest level in six years and sits well within the Reserve Bank of India’s comfort range. Some economists believe this opens the door for the central bank to consider another rate cut, possibly by 25 basis points, in the upcoming policy meeting.


However, the headline number does not tell the entire story. Even though inflation appears to be under control, many consumers may not actually feel any real relief. Moreover, it may not do much to accelerate economic growth. There are underlying pressures that are often overlooked.

The mystery of miscellaneous inflation

Much of the public discussion around inflation tends to focus on food and beverages. This is understandable, as they account for nearly 45 percent of the CPI basket and have a direct and immediate impact on household budgets. When the prices of onions or tomatoes surge, policy responses are usually swift.


But there is another component of the inflation picture that receives far less attention: the miscellaneous category. This segment includes more than 100 goods and services, covering everything from household items and personal care products to education, healthcare, and transport. In other words, it encompasses a large share of day-to-day expenditure.

Despite the overall decline in inflation, prices in this segment have not eased. According to a report by the SBI Economic Research Team, inflation in housing, fuel and light, and miscellaneous items has actually increased over the past year. Housing inflation has risen to 3.24 percent, while both fuel and light, and miscellaneous inflation have reached 2.55 percent. Within the miscellaneous group, personal care items alone have seen a price increase of 14.76 percent in just one year.


This is not a recent anomaly. In 2021–22, miscellaneous inflation rose by 35 percent, following a 26 percent increase the previous year. Clearly, this trend is persistent and significant.

Is it still fair to call this discretionary?

This brings us to an important question. Are these expenses truly discretionary anymore?

The post-pandemic world has reshaped how people live and spend. What was once considered optional is now an integral part of daily life. Domestic travel, food delivery, online education, weekend getaways, wellness routines, and digital services are no longer luxuries for many households. They have become part of how people work, learn, and care for their well-being.


Health and education, in particular, are consuming a growing share of middle-class budgets. Many families rely on loans to meet these expenses. In urban areas, commuting has become more expensive, with many professionals opting for private vehicles or air-conditioned buses to improve their daily routines. For those living away from family, ordering food is not a lifestyle choice but a practical necessity.


Given these realities, perhaps it is time to revisit how we define essential and non-essential expenditure. Expenses that were once considered discretionary are, for many, unavoidable. In today’s world, it is not just the price of vegetables that causes financial strain. Rising school fees and medical bills are just as burdensome.

What this means for growth

Connecting these insights to the broader economy reveals a more complex picture. Consumption is happening, but it is not widespread. Job creation remains subdued, wage growth is modest, and businesses are not investing aggressively. Without capacity expansion, the momentum for new employment and sustained demand remains weak.


Inflation may be slowing, but that does not mean its impact has disappeared. The real question is whether growth will follow. While optimism persists, it is clear that unless businesses begin to invest and expand, the economy will not regain its full strength.

India Inc dilemma: Growth versus inflation

At this moment, India Inc faces a critical decision. While there is hope for stronger results in the first quarter of FY26, recent trends raise concern. Credit growth in the banking sector has slowed sharply, falling from a peak of over 20 percent to just 9 or 10 percent. This reflects a cautious approach by companies that are reluctant to invest, despite two years of stable and relatively low interest rates.


Data from the Centre for Monitoring Indian Economy (CMIE) reinforces this trend. Private sector capital expenditure has declined by 9 percent year-on-year for 2024–25, marking the lowest level in the past three years.

Although falling inflation and the possibility of another rate cut are positive signals, they may not be sufficient to reinvigorate growth. Unless businesses commit to building new capacity, job creation will remain limited. Without fresh employment opportunities, wage increases will be slow. And in the absence of higher incomes, reduced prices alone will not encourage stronger consumer demand.


So while inflation appears to be under control, growth remains elusive. Until India Inc returns to the field with clear plans and bold investments, economic momentum will stay muted. Optimism alone cannot fill the gap. The time for action is now.

Key takeaways from this article for you:

What is CPI miscellaneous inflation, and how does it affect us? Why does inflation continue to pinch despite CPI inflation falling to 2.10%, the lowest in six and a half years? Will growth pick up? And how are inflation and growth correlated?

Please share your feedback, suggestions if any. You can reach me on amol.dethe@timesinternet.in and follow me on LinkedIn at ETBFSI Digest.

As usual, I am adding here the top 5 stories of the week, trust you will find them meaningful.

1. The BFSI Show: Banks slashing interest rates on savings account
2. IPO checklist for FinTechs: Credibility, governance, profits over vanity growth
3. How much has HDFC Bank grown in first full year of merger?
4. Bank of Maharashtra pares bulk deposits, leans on CASA to ease margin pressure
5. Axis Bank Q1 FY26: What is the ‘Technical Impact’ that led to NPA spike, profit decline?

Happy Reading
Amol Dethe,
Editor,
ETBFSI

(Editor's note is a column written by Amol Dethe, Editor, ETBFSI. Click here to read more of his articles exploring several buzzing topics)

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