The paradox of helping the poor.

"The US central bank has raised interest rates again, despite fears that the move could add to financial turmoil after a string of bank failures." BBC. This "rate rise is the ninth in a row by the Fed. It lifts its key interest rate to 4.75%-5% up from near zero a year ago - the highest level since 2007." "US consumer prices barely rose in March as the cost of gasoline declined, but stubbornly high rents kept underlying inflation pressures simmering, likely ensuring that the Federal Reserve will raise interest rates again next month." Reuters. Year-on-year consumer price (CPI) inflation increased by 5% in March compared to 6% in February. So now, both the CPI inflation rate and the interest rate are at the same level. On the other hand, "CPI-based retail inflation in India eased further to a 16-month low of 5.66 percent in March as food prices moderated on account of lower vegetable costs, offset in part by surging cereal prices. Inflation stood at 6.95 in March 2022." ET. Firstly, just because it was less terrible than last year is no cause for celebration and, secondly, this year's price rise is on top of last year's rise. This compounding of inflation means that prices soar even if the rate seems to be falling. In its April meeting, "The Reserve Bank of India's (RBI's) rate-setting panel, Monetary Policy Committee (MPC),...stopped its rate hike cycle by retaining the key lending rate at 6.5%." ET. At the same time the RBI forecast the average inflation rate at 5.2% for 2023-24, down from 5.3% in February. This means that, while the US Fed is still trying to achieve its target of 2% inflation rate, the RBI is happy with 5.2%. That is because the Fed is concerned that high inflation hurts the poor. "Drawing upon recent household survey data, we show that high inflation is disproportionately hurting low-income households, including Black and Hispanic households and renters. It is noteworthy that the survey results do not support the suggestion of Nobel Laureate Paul Krugman that low income families 'have actually been hurt less by inflation than families with higher incomes' because the wages of low-income families rose faster." dallasfed.org. The Dallas Fed has actually carried out a survey of how the poor are coping with rising prices. No such studies are done in India. Why? Because, over 800 million people are being supplied with free food grains under the National Food Security Act, at least till December 2023. NDTV. And, relatively low borrowing costs help the rich who are able to buy assets with cheap loans. "According to rating agency ICRA, home sales in the first half of the current financial year have shown a 49% increase year-on-year - this is the highest number of sales in the past 10 years, data show." FE. While the share of affordable housing dropped by 21%, sales of apartments priced at over Rs 15 million doubled in the first half of 2022. Sales of luxury cars have been rising in the March quarter. Verve Times. Passenger vehicle sales increased by 26.7% in 2022-23, but, while "SUVs accounted for more than half of the total passenger vehicle sales during the year," "The total number of small entry-level cars sales stood at around 252,000 units in FY 2022-23, which is less than half of 5,83,000 units sold in 2016-17." DH. Paul Krugman considers himself to be a modern liberal, equivalent to social democrat in Europe. wikipedia. India is a socialist country. wikipedia. Socialists want to help the poor. But socialism helps the rich. Paradox.