Headline inflation is a summary statistic and summary statistics conceal as much as they disclose. The latest Consumer Price Index release from the National Statistical Office, under the Ministry of Statistics and Programme Implementation, places combined CPI inflation for Jammu and Kashmir at 5.26 percent against an All-India average of 4.82 percent. These account for Forty-four basis points and once you read off a spreadsheet, the divergence looks like noise. But read off a household ledger, it is a standing deduction from real income, levied every month, in every market, on every basket of goods and services a family has no option but to buy.

Economists call inflation a regressive tax and the label survives scrutiny. Its incidence falls heaviest on households whose consumption is weighted toward necessities and whose marginal propensity to consume approaches unity. Where food, fuel and transport dominate the expenditure pattern, a persistent differential is not a statistical curiosity. It is purchasing power erosion, compounding, requiring no legislation and issuing no receipt. Nominal income sustains the illusion of stability whereas real income records what happened. Which of the two governs a family at the counter?

Structural OriginsThe first explanation is geography. Jammu and Kashmir sits at the end of a long and fragile logistical chain. Most consumer goods arrive by road, over mountain passes and through corridors that close for weather, landslides and repair. Every kilometre adds freight, insurance, spoilage risk and time. These logistical costs enter the final price of a commodity before any trader has taken a rupee of margin. This is textbook cost-push inflation, imposed by terrain rather than by demand.

Import dependency........

© Greater Kashmir