Updated on: Tuesday, November 23, 2021, 04:34 PM IST

Teji Mandi Explains: Clothes, electronic items to get costlier next year

Teji Mandi Explains: Clothes, electronic items to get costlier next year | Photo: Pexels

Teji Mandi Explains: Clothes, electronic items to get costlier next year | Photo: Pexels


When you pay more for clothes this year as compared to the same time last year, you’re witnessing inflation. The market is already red hot with inflation, where prices of vegetables, electronic goods etc., are already high. On top of that, the government has decided to increase the goods and services tax (GST) on finished products from 5% to 12%. This means a bigger hole in the common man’s pockets.

What Will Happen?

The rates of textile (including synthetic yarn, fabric, tent, blanket, accessories, rugs, etc.) have been increased to 12%. Meanwhile, prices of television, smartphones, air-conditioners and refrigerators are likely to increase by 5-6% by next month and another round of price hike is expected in January next year. An important point to note here is that agricultural commodities have gone up because of crop damage due to unpredictable showers that have damaged the supplies and production.

Who’s Affected?

The MSME (micro, small and medium enterprises) space will be largely affected. It’s only been a while that the COVID-19 fears have subsided, and a GST hike this big will directly push up prices for consumers and spur inflation resulting in low demand. This means we are back to square one.

The fabric production in India is largely unorganised. The rise in the GST rate to 12% would hit the power loom and handloom workers. It seems that the market can absorb a 3-4% hike, but a steep hike of 7% will hit the MSME sector workers. The economy was just getting back in shape, and it’s distorted again.

Why Should It Bother You?

Well, because it’s going to affect our monthly home expenses. Like we said earlier, agricultural commodities will be sold at a higher price now. This means that the finished products will also cost higher. The overall food consumption will rise if the cost of raw materials is higher. Now, this is not just the case with India, the other countries are suffering too. October data from the US reveals that it has registered the highest inflation rate in three decades. Meanwhile, Germany has a 4.5% inflation rate, Russia has over 7%, Brazil has over 10%, Turkey has 20% and Argentina at a whopping 50%.

What Lies Ahead?

A higher GST rate will remain a worrisome fact for a common taxpayer in India. The truth is if the international crude oil price doesn’t simmer, the inflation rate will tend to hover at high levels. If core inflation shoots up, the RBI will have to step in. So far, the central bank has remained supportive of the demands of a common man, it’s expected it will continue to do the same in the near future.

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Published on: Tuesday, November 23, 2021, 04:34 PM IST