Here is why Inflation is still high for many voters

Recent surveys have shown Inflation is still being mentioned as an issue. This is intriguing given that India’s inflation rate has literally collapsed. So why are voters complaining? To investiage this, we consider the situation of construction workers. India has spent massive amounts of money on construction and one expects that Construction workers would gain the most from such a boom. We used 4 Data sets for this analysis (all data pertains to men)

Wage Data January 2016 (Oldest Available)

Wage Data October 2018 (Latest Available)

Inflation Data Jan 2016 (Rural)

Inflation Data October 2018 (Rural)

Here is how the chart looks for key States and all India

If one looks at the data closely, apart from the first 5 States, every state is showing lower wage growth for rural construction workers than inflation in rural India. Interestingly most states seem to have fairly low inflation levels (by UPA standards given that this data is for 33 months).

It appears from this data that lower inflation is not going to keep voters happy anymore and the real issue is the squeeze in wages in most States. This cannot be randomly extended to every labour group but if you hear rural voters complaining about inflation, it would be fair to assume that their real issue is wage growth. In Rajasthan, labour abandoned BJP in really big numbers (negative swing of 10%). This group is perhaps a critical swing segment in every State.