This study explorers the intricate relationship between individual incomes across various economic classes and the impact of inflationary pressures on income dynamics. The primary objective of this research is to assess how inflation affects different socio-economic groups. By employing both quantitative and qualitative methodologies, the study evaluates the influence of inflation rates on diverse income brackets and demographic segments.
The research also examines the role of government policies, particularly in relation to pensions and economic frameworks, in mitigating these effects. Additionally, the study investigates the impact of inflation on consumers purchasing power, revealing the inflation has considerably reduced their ability to meet essential expenses. Special focus was given to analyzing the differential effects of inflation across various economic sectors.
TABLE OF CONTENT
ABSTRACT
CHAPTER 1 INTRODUCTION
CHAPTER 2 LITERATURE REVIEW & RESEACH METHODOLOGY
CHAPTER 4 DATA ANALYSIS AND INTERPRETATION
4.1 RESPONSE STATEMENT
4.2 INTERPRETATION
CHAPTER 5 FINDINGS, RECOMMENDATIONS & CONCLUSION
REFERENCES
ABSTRACT
This study explorers the intricate relationship between individual incomes across various economic classes and the impact of inflationary pressures on income dynamics. The primary objective of this research is to assess how inflation affects different socio-economic groups. By employing both quantitative and qualitative methodologies, the study evaluates the influence of inflation rates on diverse income brackets and demographic segments.
The research also examines the role of government policies, particularly in relation to pensions and economic frameworks, in mitigating these effects. Findings indicate that a significant portion of pension recipients express dissatisfaction with their pension amounts, further emphasizing the strain caused by inflation.
Additionally, the study investigates the impact of inflation on consumers purchasing power, revealing the inflation has considerably reduced their ability to meet essential expenses. Special focus was given to analyzing the differential effects of inflation across various economic sectors. The findings highlight that the grocery sector experienced the most substantial impact from inflationary pressures.
Key words; Inflation, Income, Economic Impact ,Socio-Economic Classes ,pension ,Grocery Sectors.
INTRODUCTION
The persistent rise in prices of goods and services known as inflation creates serious worry for both economic experts and governmental officials as well as common people. Fiscal inflation creates economic effects throughout all economic areas mainly through its influence on specific income distribution patterns. Researchers conduct an analytic investigation to uncover the complex income-inflation relationship through this research. Researchers delve into this investigation to uncover the relationship between inflationary patterns as they influence changes in income level. The research demonstrates how inflation affects purchasing power directly because this transformation determines what consumers can buy as well as how they spend money and what they save and how it affects their financial situation. According to research findings inflation produces unequal effects on different income levels because poorer households experience more economic trouble than wealthier members of society do. Research takes a comprehensive approach to study inflation's relationships with economic elements that include monetary policies together with government policies and worldwide market movements. The study evaluates linked economic factors to generate specific guidance for policymakers to develop successful inflation control measures that protect economic stability. The researcher places great importance on dependable data analysis by employing sophisticated econometric methods in their analysis. This analysis incorporates precise assessment methods and prolonged analysis because the research team wants to develop data-driven conclusions that make significant contributions to economic theories and policy structures. The academic work entitled “The Interplay Between Inflation and Income: A Thorough Investigation” dedicates itself to understanding inflation's varied effects on income. A focused analysis works to improve inflation’s economic stability comprehension and create policy insights for better financial equity results.
The selection of the research topic, “The Interplay Between Inflation and Income: A Thorough Investigation selection of this research topic originates from its crucial role in both economic theory and actual world outcomes. Due to its power to perform budget disruption as well as create business transformations and financial disparity expansion this study explains why comprehensive analysis of inflation effects is essential. Researchers find the analysis useful for political officials who work to achieve economic developments without destabilizing prices. Analysis of how inflation influences income will deliver meaningful information which helps build policies to counter inflation's negative impacts. The research studies existing social issues which stem from the expanding distance between different income classes. The disadvantageous impact of inflation on disadvantaged families requires comprehensive awareness about price elevation as an equalizing force in financial status. Research methods in economics receive an advancement opportunity through this topic. This study uses contemporary analytical methods and econometric methods to enhance the interpretation of data linked to inflation. The study pursues the goal of illuminating an essential economic matter of present times. The research carefully investigates income repercussions of inflation to create insights which support economic stability alongside better decision-making and fair financial distributions among people.
The research topic, “The Interplay Between Inflation and Income: A Thorough Investigation,” holds significant relevance across multiple economic and social dimensions. Understanding the intricate connection between inflation and income can provide valuable insights for various stakeholders, including policymakers, businesses, and individuals .
The impact of inflation rate stands as one of the core elements which guides worldwide monetary policy decisions. As inflation trends alter central bank economic policies through interest rates adjustments and other measures these actions impact both employment numbers and investment volume and economic growth metrics. The detailed examination of inflation rates against income distribution will help officials create financial stability measures and progress-oriented development programs People's buying capability suffers directly from inflation which guides pricing decisions of businesses alongside investment choices and profit margin management. Our analysis of such economic patterns enables better comprehension of consumer demand alterations along with business reaction traits throughout market changes. The knowledge proves critical for business development of pricing models alongside government execution of market regulation systems. Current inflation affects different income groups differently since poor people spend more of their money on necessities than wealthy groups. People who live in lower-income families experience the highest increase in cost of living since they use a greater share of their budget on essential items. The research investigates the inflation-driven increase of income gaps together with methods to minimize economic disparities. A stable economy depends on inflation levels which need proper management. Financial uncertainty together with market volatility and declined consumer confidence arise when inflation goes unchecked. The research uses historical pattern analysis and contemporary statistical data to discover the main inflation drivers and recommend long-term economic stability methods. Global trading activities along with financial market movements are affected by the inflation dynamics and income trends across national borders. The worldwide analysis between inflation and income enables better comprehension of international competitiveness while providing better understanding of exchange rate dynamics and capital movements which allows improved global economic cooperation
In summary, this research is crucial for shaping effective policies, understanding economic behavior, addressing social inequality, ensuring financial stability, and enhancing global economic collaboration. A well-rounded study on inflation and income dynamics can contribute to a more balanced and resilient economy.
1.3. Need for study:
- A study will evaluate how inflation affects individuals receiving fixed income especially among pensioners and social security recipients because such beneficiaries struggle to hold their current purchasing power.
- This examination evaluates the inflation effects on lower-, middle- and upper-class Hyderabad who demonstrate different income responses to economic changes.
- The analysis investigates how inflation reduces buying capacity throughout diverse economic classes in Hyderabad to establish price escalation's specific demographic targets.
LITERATURE REVIEW
2. 1. Review of literature
A wide range of research has been conducted on inflation and its impact on economic dynamics, covering aspects such as demand-pull and cost-push inflation, income inequality, purchasing power, and macroeconomic stability. The following literature provides valuable insights into these topics:
1. (Jain et al., n.d.) explore the concepts of demand-pull and cost-push inflation, focusing on their macroeconomic causes. The study examines how excessive demand in an economy can trigger inflation, pushing prices beyond full employment levels. It also delves into cost-push factors, such as rising production costs, that contribute to price increases.
2. (Patnaik et al., n.d.) analyze India’s rising Consumer Price Index (CPI) inflation, which has consistently remained above 5% since 2006. The paper compares India’s inflation trends with those of other emerging economies, particularly in the post-2008 financial crisis era, highlighting the unique factors contributing to India’s inflationary pressures.
3. (Suruliraj et al., n.d.) investigate the cumulative performance index of inflation in both rural and urban areas of India. Their study seeks to determine whether inflation trends in these regions exhibit a long-term correlation and how they collectively shape the country’s overall inflation scenario, using data from the Reserve Bank of India (RBI) between 2014 and 2021.
4. (Barnett et al., 2020) examine the relationship between inflation and inflation uncertainty across five major economies: the U.S., U.K., Eurozone, South Africa, and China. The research evaluates how inflation expectations evolve under different monetary policies, central bank independence, and economic conditions over the past 50 years.
4. (Bhattacharya et al., 2015) focus on food inflation in India, particularly between 2006 and 2013. The study finds that food inflation rates in India nearly doubled compared to the previous decade due to demand-supply mismatches, affecting affordability and overall economic stability.
5. (Ellis & Wands, 2023) provide an overview of cosmological inflation, explaining its role in the Big Bang theory and cosmic structure formation. Though not directly related to economic inflation, this paper explores inflation in a broader scientific context.
6. (Siami-Namini & Hudson, 2019) discuss the impact of inflation on income inequality in both developed and developing countries. The study examines how economic growth interacts with inflation and income distribution, offering insights into policy measures that could mitigate inequality.
7. (Ehrmann et al., 2017a) analyze consumer inflation expectations, using data from the University of Michigan’s Surveys of Consumers. The findings highlight how financial well-being, spending attitudes, and expected income changes influence inflation perceptions..
8. (Armendariz-Picon et al., 1999) “k-Inflation”. This paper explores a broad category of higher-order scalar kinetic terms, beyond quadratic forms, that independently drive inflation without the need for potential terms. introduce the concept of k-inflation, a theoretical framework where inflation is driven by kinetic energy rather than traditional potential-based models.
9. (Mohanty & John, 2015) investigate the determinants of inflation in India from 1996 to 2014 using econometric models. Their research finds that crude oil prices, fiscal policy, and monetary policy significantly influence domestic inflation rates.
10. (Anand et al., 2014) explore the role of monetary policy in controlling food inflation in India. The study argues that high food and fuel inflation create long-term inflationary pressures, necessitating strict monetary controls and structural reforms.
11. (Goel, 2018) examines how India transitioned from using the Wholesale Price Index (WPI) to the Consumer Price Index (CPI) for inflation measurement. The study highlights the differences between these indices and their impact on economic analysis.
Top of Form
12. (Jaravel, 2021) “Inflation Inequality: Measurement, Causes, and Policy Implications”. This article explores inflation inequality across income levels, discussing recent advances in four areas: price index theory, the correlation between income and inflation rates in the U.S., impacts of innovation and trade on inflation inequality, and policy implicationsdiscusses inflation inequality, emphasizing how different income groups experience inflation differently. The study finds that technological innovation contributes to inflation disparities, affecting lower-income groups more significantly than wealthier individuals.
Top of Form
13. (Glawe & Wagner, 2024) “Inflation and inequality: new evidence from a dynamic panel threshold analysis”. This study investigates the relationship between inflation and income inequality using a dynamic threshold panel data model across 101 countries from 1985 to 2020. conduct a dynamic panel threshold analysis on inflation and inequality across 101 countries from 1985 to 2020. Their findings suggest that inflation above 6% exacerbates income inequality, making disinflation policies crucial in high-inflation economies. Findings reveal that inflation rates beyond 6% are linked to higher income inequality, emphasizing that disinflation policies may promote income equality in high-inflation countries. The study also notes the impact of initial inequality and unemployment on exacerbating inequality.
Top of Form
14. (Binder, 2019) “Inequality and the inflation tax”. This study envisages the fact that recent research challenges the conventional positive correlation between inflation and income inequality, revealing a reversal, notably in European economies. challenges conventional beliefs about the relationship between inflation and inequality. The study finds that, in certain European economies, higher inflation can sometimes reduce income inequality, depending on tax policies and monetary strategies. The correlation's direction depends on the time period and the countries studied. In the political economy literature, monetary financing and income taxes are considered substitutes. The shift to a more negative correlation between inequality and inflation corresponds with a more positive correlation between inequality and income tax revenue. Cross-country and panel regression analyses suggest that independent central banks in democracies can resist inflation pressures associated with rising inequality. Top of Form
15. (Bhunia, 2016) examines how inflation and interest rates influence economic growth in India between 1992 and 2015. The study concludes that maintaining low inflation and stable interest rates is essential for long-term economic growth. “How Inflation and Interest Rates Are Related to Economic Growth? A Case of India”. This study investigates the relationship between inflation, interest rates, and economic growth in India using annual time series data from 1992 to 2015. Various tests, including correlation, unit root, cointegration, vector error correction, and Granger causality, are employed. Results indicate a long-term causality from economic growth to inflation and interest rates, with a unidirectional causal link from economic growth to interest rates. The findings suggest that maintaining low inflation and optimal interest rates can positively impact economic growth, providing guidance for policymakers like the Reserve Bank of India.
Top of Form
16. (MPhil Scholar, n.d.) “A COINTEGRATION AND ERROR CORRECTION APPROACH TO THE DETERMINANTS OF INFLATION IN INDIA”. This study investigates inflation determinants in India, finding that GDP and broad money positively impact inflation in the long run, while interest rates and exchange rates have a negative effect. The analysis suggests that a moderate level of inflation is desirable for economic health.analyzes inflation determinants in India, highlighting the role of GDP growth and money supply in driving inflationary trends. The study suggests that while moderate inflation is beneficial, excessive inflation negatively impacts economic stability. Specifically, a one percent increase in income leads to a 0.37% rise in inflation, and a one percent increase in money supply results in a 5% increase in price levels in India.
Top of Form
17. (Veni & Choudhury, 2007) “Inflation and Growth Dilemma: An Econometric Analysis of the Indian Economy”. This study examines the relationship between inflation and economic growth in India from 1981 to 2004. Investigate the inflation-growth relationship in India from 1981 to 2004. Their study finds no strong long-term correlation between inflation and economic growth, emphasizing the need for independent policies to control inflation and boost growth.Causality and cointegration tests reveal that these variables are independent of each other, suggesting no long-term relationship. The study recommends the government focus on accelerating economic growth and implementing timely measures to control inflation for maintaining economic stability.Top of Form
2.2. Research Gap
An insufficient number of studies exists to demonstrate how inflation shapes the earnings of different economic status families from lower-class to upper-class in Hyderabad. The particular influences of inflation on Hyderabad residents’ purchasing power according to their socioeconomic status require additional investigation. The effects of inflation on Hyderabad pensioner income stand uninvestigated .
2.3. Statement of the Problem
Over the past few years global inflation rate changes have severely tested the economic stability of people from various income brackets. All economic classes from lower to upper and middle experience intensifying worries about their money stability and buying capacity. This research investigates reasons behind economic fluctuation among Hyderabadi society along with assessing inflation's influence on various economic classes .
2.4. Research Objectives
1. To analyze how inflation affects income across various sectors in Hyderabad, such as agriculture, education, and healthcare.
2. To compare the relative increase or decline in income among lower-, middle-, and upper-class families in Hyderabad in relation to inflation.
3. To assess how inflation impacts the purchasing power of individuals across different socioeconomic classes in Hyderabad.
4. To explore the effects of inflation on fixed incomes, pensions, and social security benefits, particularly in Hyderabad.
RESEARCH METHODOLOGY:
2.5. Sample Size:
The research was conducted with a sample comprising of 124 participants.
2.6. Sampling Techniques:
The type of sampling used to collect data for this study is convenient Sampling. We used primary data as a source of collecting data. The samples were collected by means of sharing of Google forms. The samples were collected from all the age groups between 18 to 60 of both men and women who make income in the state of Hyderabad. This was chosen to understand the nomenclature of people of different classes in the society (such as lower-, middle- and high-class people) with respect to income and inflation. We used analytical research as a research type, where facts and numerical information were thoroughly analyzed.
2.7. Period of the study:
The research project spans from December to March, indicating that data collection, experiments, analyses, and other research activities occurred within this specific timeframe. This duration allowed to gather pertinent information, conduct investigations, and analyze results during the designated months.
2.8. Limitations of study:
The limitation of this particular study would be that,
1. The study is confined particularly to the people residing in the state of Hyderabad only.
2. The study focuses on the era of lower-, middle- and upper-class individuals separately and not as a whole.
3. One potential limitation of the research project is its restricted timeframe, which extends from December to March. This limited duration may constrain the depth and breadth of data collection and analysis, potentially influencing the comprehensiveness and generalizability of the study's findings.Top of Form
2.9. Scope of study:
The scope of this study is limited to studying and analyzing how inflation rates.
1. Impact one’s purchasing power in regards to lower, middle, and upper class. (In respect to Hyderabad.
2. Impact the fixed incomes of government pensioners and other security benefit receivers. (in respect to Hyderabad).
3. Changes in inflation rates and income dimensions over the past 5 years.
2.10. Statistical Tools:
1. Chi-square test:
A statistical method for assessing the difference between observed and expected data is the Chi-Square test. When the data to be analysed is from a random sample, and when the variable is the question is a categorical variable, you can use a chi-square test of independence when you have two categorical variables. It allows you to test whether the two variables are related to each other. If two variables are independent (unrelated), the probability of belonging to a certain group of one variable isn't affected by the other variable.
2. Correlation:
Correlation is a statistical method used to assess a possible linear association between two continuous variables. Correlation is a statistical measure that expresses the extent to which two variables are linearly related (meaning they change together at a constant rate). It's a common tool for describing simple relationships without making a statement about cause and effect.
3. SPSS:
The analysis of the research data was primarily conducted using the SPSS software, which served as a significant statistical tool in the study. SPSS, which stands for Statistical Package for the Social Sciences, is a software utilized extensively for statistical analysis across various sectors including social sciences, psychology, healthcare, and business. It offers a wide range of functionalities such as descriptive statistics, hypothesis testing, regression analysis, and data visualization. Researchers, analysts, and students frequently rely on SPSS to conduct thorough analyses and extract valuable insights from their datasets.
2.11. Hypothesis
Objective 1:
Null Hypothesis: There is no clear increase or decrease in income that can be linked to inflation.
Alternative Hypothesis: Income has shown noticeable growth or decline in relation to inflation.
Objective 2:
Null Hypothesis: Inflation has had no noticeable effect on the spending power of lower-, middle-, and upper-class families.
Alternative Hypothesis: Inflation has significantly impacted the spending power of lower-, middle-, and upper-class families.
Objective 3:
Null Hypothesis: Inflation has had no noticeable effect on people’s pensions.
Alternative Hypothesis: An investigation suggests that inflation has affected pension holders’ incomes.
2.12. Sources of data:
The data for this study is primarily based on firsthand information collected directly from respondents.
Primary Data: This refers to original data collected by the researcher specifically for this study’s objectives. Since primary data is collected firsthand, it is considered authentic and has not been processed statistically before use. Gathering primary data allows researchers to obtain information tailored to their research needs.
In this study, primary data was collected through Google Forms, which were circulated to gather relevant insights and achieve the study’s objectives.
Secondary Data: In addition to primary data, secondary sources were used to review past research papers and identify gaps in existing studies.
2.13. Research type:
This research follows an analytical approach, combining both quantitative and qualitative methods.
- Quantitative Analysis: Involves collecting and analyzing numerical data to draw meaningful conclusions
- Qualitative Analysis
: Focuses on gathering and evaluating non-numerical information such as observations facts .
DATA ANALYSISAND INTERPRETATION:
STATEMENT OF RESPONSE
Age
Table 4.1 Responses of different age groups
Illustrations are not included in the reading sample
Figure No 4.1Responses of different age groups
Illustrations are not included in the reading sample
Source: primary data
- The largest proportion of respondents, constituting 35% of the total, falls within the age range of 35-54 years. This age group emerges as the most actively engaged in the research. Following closely behind.
- The age group of 18-24 years represents over 31% of the respondents, indicating substantial participation from a younger demographic. This suggests a notable interest or awareness among younger individuals regarding the topic under investigation.
- The age group of 25-34 years comprises 30% of the respondents, demonstrating another sizable segment of participants within a relatively younger adult demographic.
- Conversely, respondents above the age of 55 years represent only 4% of the total, indicating a smaller proportion of participation from older individuals in the study.
Gender
Table 4.2 Responses on gender basis
Illustrations are not included in the reading sample
Figure 4.2 Responses on gender basis
Illustrations are not included in the reading sample
Source: primary data
This data reveals that out of 124 collected responses discussing inflation's effects on income, about,
- 58.1% of participants identified as female,
- with the remaining 41.9% identifying as male.
- This distribution hints at potential gender divergence in viewpoints or experiences concerning inflation's influence on income. It may also indicate varying concerns, priorities, or sensitivities regarding economic matters across genders.
- Overall, the gender distribution in the responses suggests that understanding the intersection of gender and economic issues is crucial for addressing disparities and ensuring that policy responses to inflation consider the diverse perspectives and experiences of different demographic groups.
Employment status
Table 4.3 Employment status of the respondents
Illustrations are not included in the reading sample
Figure 4.3 Employment status of respondents
Illustrations are not included in the reading sample
Source: primary data
- A substantial 42.7% are engaged in full-time employment, indicating a significant reliance on traditional work arrangements for income generation.
- Additionally, 11.3% work part-time, suggesting a segment of the sample may have alternative work arrangements or seek supplementary income sources.
- The presence of 13.7% self-employed individuals reflects entrepreneurial ventures and freelancing pursuits, highlighting a degree of autonomy and flexibility in income generation.
Annual Household Income:
Table 4.4 Annual household income of respondents
Illustrations are not included in the reading sample
Figure 4.4 Annual household income of respondents
Illustrations are not included in the reading sample
Source: primary data
The data provides a comprehensive breakdown of respondents' income levels, revealing a spectrum of earnings within the sample.
- Approximately 16.9% of respondents, comprising 21 individuals, earn less than ₹2,00,000, indicating a segment with relatively lower incomes.
- In contrast, 35.5% (44 people) fall within the income range of ₹2,00,000 to ₹5,00,000, suggesting a substantial proportion with moderate earnings.
- A further 25.8% (32 people) earn between ₹5,00,000 and ₹7,50,000, reflecting a sizeable contingent in the mid-range income bracket. Additionally,
Awareness towards inflation:
Table 4.5 Respondents awareness towards inflation
Illustrations are not included in the reading sample
Figure 4.5 Respondents awareness towards inflation
Illustrations are not included in the reading sample
Source: primary data
- A significant proportion, accounting for 25.8% (32 people), strongly agree that they are knowledgeable about inflation, demonstrating a robust understanding of inflationary concepts.
- Similarly, 25% (31 people) agree, indicating a substantial group with recognized awareness of inflation.
- In contrast, a considerable segment, representing 35.5% (44 people), remains neutral, suggesting uncertainty or indecision regarding their awareness of inflation.
Experienced any significant changes in income over the past 5 years:
Table 4.6 Respondents experiencing any significant changes in income over the past 5 years
Illustrations are not included in the reading sample
Figure 4.6 Respondents experiencing any significant changes in income over the past 5 years
Illustrations are not included in the reading sample
Source: primary data
The data on changes in respondents' income over the past five years reveals a notably positive trend,
- With 95.2% of the sample, totaling 118 individuals, reporting an increase in their income during this period. This widespread improvement suggests an overall enhancement in financial circumstances for the majority of respondents.
- Conversely, only a very small minority, accounting for 2.4% or 3 people, indicated a decrease in income, indicating limited instances of financial decline.
- Similarly, another 2.4% (3 people) reported no change in their income, implying stability in financial situations for this group
Noticed changes in the prices of everyday goods and services recently:
Table 4.6 Respondents response over noticing changes in prices of everyday goods and services
Illustrations are not included in the reading sample
Figure 4.6 Respondents response over noticing changes in prices of everyday goods and services
Illustrations are not included in the reading sample
Source: primary data
The data reveals a prevalent perception among respondents regarding recent changes in the prices of everyday goods and services.
- A significant majority, accounting for 83.1% (103 people) of the sample, strongly agree that they have noticed these changes, indicating a widespread awareness of rising prices.
- Additionally, 15.3% (19 people) agree with this observation, further highlighting the prevalence of perceived price fluctuations.
- Conversely, only a very small fraction, represented by 0.8% (1 person), remains neutral on the matter, suggesting minimal uncertainty regarding their perception of price changes.
- Similarly, another 0.8% (1 person) disagrees with the notion of noticing changes in prices, indicating a contrasting viewpoint within the sample.
Specific items or services whose prices have increased significantly:
Table 4.7 Respondents choosing over specific items or services whose prices have increased
Illustrations are not included in the reading sample
Figure 4.7 Respondents choosing over specific items or services whose prices have increased
Illustrations are not included in the reading sample
Source: primary data
- Majority of the people have found that the price of groceries is significantly affected the most, a less significant impact was found over housing goods due to which the purchasing power and consumer behaviour has changed.
- Transportation also had an average impact due to inflation but not as that of groceries. There was observed less impact of inflation over healthcare services and the least impact was observed over the sector of education.
Inflation affected the daily expenses and cost of living:
Table 4.8 Respondents response over the matter of inflation affecting daily expenses
Illustrations are not included in the reading sample
Figure 4.8 Respondents response over the matter of inflation affecting daily expenses
Illustrations are not included in the reading sample
Source: primary data
- A significant majority, accounting for 84.7% (105 people), strongly agree with this notion, highlighting a widespread acknowledgment of increased expenses.
- Additionally, 12.9% (16 people) also agree, further supporting the idea of inflation's impact on daily expenses.
- However, a small portion, representing 1.6% (2 people) of the sample, remains neutral, indicating some uncertainty about inflation's influence.
- Similarly, only 0.8% (1 person) of respondents disagree, suggesting a differing opinion.
Currently receiving a fixed income or pension:
Table 4.9 Respondents responses over receiving any fixed income or pension
Illustrations are not included in the reading sample
Figure 4.9 Respondents responses over receiving any fixed income or pension
Abbildung in dieser Leseprobe nicht enthalten
Source: primary data
- Nearly a third of the sample, comprising 29.8%, currently receives such income, indicating a notable reliance on consistent financial support like pensions or fixed income.
- Conversely, the majority, accounting for 70.2% of respondents, do not rely on fixed income or pension sources, suggesting a larger proportion without a regular, predetermined income stream.
- These findings underscore the diverse financial situations among respondents, with a significant minority depending on fixed income or pension while the majority navigate financial matters without such structured support, reflecting varying degrees of financial stability and independence within the sample.
Satisfied with the stability of fixed income or pension payments we receive:
Table 4.10 Respondents response over the satisfaction of the stability of the pension received
Illustrations are not included in the reading sample
Figure 4.10 Respondents response over the satisfaction of the stability of the pension received
Illustrations are not included in the reading sample
Source: primary data
- A small fraction, around 4%, strongly agree that they are content with the stability of their pension.
- while 14.5% agree, indicating a slightly larger group satisfied with their income stability.
- However, the majority, making up 37.9% of pension recipients, remain neutral, suggesting uncertainty or mixed feelings about their satisfaction with income stability.
- Conversely, a notable percentage, about 13.7%, disagree with the statement, expressing dissatisfaction with their pension's stability.
Noticed changes in the purchasing power of fixed incomes or pensions received due to inflation:
Table 4.11 Respondents response over them noticing changes in the purchasing power of fixed incomes or pensions received due to inflation
Illustrations are not included in the reading sample
Figure 4.11 Respondents response over them noticing changes in the purchasing power of fixed incomes or pensions received due to inflation
Illustrations are not included in the reading sample
Source: primary data
- The data underscores a widespread acknowledgment among pensioners regarding the impact of inflation on their fixed income or pension purchasing power, with a significant majority of 89.5% reporting noticeable changes.
- This suggests that the majority of pensioners are experiencing challenges in maintaining their standard of living due to inflation, leading to adjustments in their ability to afford goods and services relative to their income.
The level of concern regarding the potential future impact of inflation on fixed income or pensions
Table 4.12 Respondents concern over the potential future impact of inflation on fixed income or pensions
Illustrations are not included in the reading sample
Figure 4.12 Respondents concern over the potential future impact of inflation on fixed income or pensions
Illustrations are not included in the reading sample
Source: primary data
The data collected regarding concerns about the potential future impact of inflation on fixed income, pension, or social security reveals a nuanced perspective among respondents.
- While a significant portion (41.1%) either strongly agree or agree that they have apprehensions about inflation's future implications.
There ought to be increased public awareness and discourse regarding the impact of inflation on fixed income, pension, and social security:
Table 4.13 Respondents response over the matter if there ought to be increased public awareness and discourse regarding the impact of inflation on fixed income, pension, and social security
Illustrations are not included in the reading sample
Figure 4.13 Respondents response over the matter if there ought to be increased public awareness and discourse regarding the impact of inflation on fixed income, pension, and social security
Illustrations are not included in the reading sample
Source: primary data
- The overwhelming response indicating agreement (96%) regarding the necessity for increased public awareness and discourse on the impact of inflation on fixed income, pension, and social security suggests a widespread recognition of the importance of this issue.
- This substantial majority reflects a consensus among respondents that there is a critical need to elevate understanding inflation on these financial aspects.
Exploring sectoral variations within Hyderabad in terms of inflation impact on income. (agriculture, education, health care etc.)
Figure 4.14 Respondents choosing over specific items or services whose prices have increased
Illustrations are not included in the reading sample
Source: primary data
- The data on significant price increases in groceries (66.1%), housing (41.9%), transportation (38.7%), healthcare (28.2%), and education (25%) due to inflation underscores the pervasive impact of rising costs on essential aspects of daily life.
- The substantial rise in prices for groceries poses immediate challenges for household budgets, particularly for low-income families.
- Concurrently, soaring housing costs exacerbate the affordability crisis in urban areas and hinder access to stable housing for many individuals.
- Higher transportation expenses strain over Travelers and passengers.
- Escalating healthcare and education costs further compound financial burdens, limiting access to vital services and educational opportunities.
In conclusion, the significant increases in prices for groceries, housing, transportation, healthcare, and education due to inflation highlight the complex challenges faced by consumers and households in managing essential expenses.
Comparing relative growth or decline of income in regards with inflation of Lower-, Middle- and Upper-class families in Hyderabad.
Illustrations are not included in the reading sample
The table illustrates the varying experiences of individuals from diverse income brackets regarding changes in their income over the past 5 years. This data offers valuable insights into how inflation dynamics could impact different segments of the population, contingent upon their income levels.
The data shows that among individuals with household incomes below $200,000:
- 1 out of 21 individuals experienced no change in income.
- 18 out of 21 individuals witnessed an increase in income.
- 2 out of 21 individuals encountered a decrease in income.
This distribution suggests a mixed impact of inflation on this income group, with a significant portion experiencing income growth, some maintaining stability, and a small fraction facing income reduction. Such variability indicates that inflation could disproportionately affect lower-income households, potentially resulting in income erosion for those who experienced decreases.
Above $200,000 - Below $500,000:
- 0 out of 44 individuals experienced no change in income.
- 43 out of 44 individuals witnessed an increase in income.
- 1 out of 44 individuals encountered a decrease in income.
The overwhelming majority of individuals in this income bracket experienced income growth over the past 5 years, with only a small minority facing a decrease. This suggests a strong positive trend in income dynamics within this particular income range.
Above $500,000 - Below $750,000:
- 2 out of 32 individuals experienced no change in income.
- 30 out of 32 individuals witnessed an increase in income.
- 0 out of 32 individuals encountered a decrease in income.
In this income bracket, a notable proportion of individuals experienced no change in income, while the overwhelming majority saw an increase. There were no reported instances of income decrease, indicating a robust positive trend in income dynamics within this income range.
Above $750,000 - Below $1,000,000:
- 0 out of 20 individuals experienced no change in income.
- 20 out of 20 individuals witnessed an increase in income.
- 0 out of 20 individuals encountered a decrease in income.
In this income bracket, every individual experienced an increase in income over the past 5 years, with none reporting any decrease. This indicates a consistent positive trend in income dynamics within this particular income range, reflecting strong economic growth or other factors contributing to income increases for individuals in this bracket.
Above $1,000,000:
- 0 out of 7 individuals experienced no change in income.
- 7 out of 7 individuals witnessed an increase in income.
- 0 out of 7 individuals encountered a decrease in income.
In this income bracket, every individual experienced an increase in income over the past 5 years, with none reporting any decrease. This indicates a consistent positive trend in income dynamics within this particular income range, suggesting robust economic growth or other factors contributing to income increases for individuals in this bracket.
- Null hypothesis: There was no significant growth or decline of income observed in regards to inflation.
- Alternative hypothesis: There was significant and relative growth of income that was observed in relation to inflation
Chi- square test:
Illustrations are not included in the reading sample
While interpreting the results of the Pearson chi-square test, the p-value (0.248) is greater than the chosen significance level (commonly 0.05), therefore we fail to reject the null hypothesis, so there is no statistically significant association between the variables, "Current annual household income" and "Experienced any significant changes in your income over the past 5 years."
Correlation test:
Illustrations are not included in the reading sample
Pearson's correlation coefficient measures the linear relationship between two variables. In this case, the correlation coefficient is negative (-0.099), indicating a weak negative linear relationship between the variables being analysed. However, the p-value of 0.276 suggests that this relationship is not statistically significant at the conventional significance level of 0.05.
The Spearman correlation coefficient of -0.115 suggests a weak negative monotonic relationship between the variables. However, similar to Pearson's correlation, the p-value of 0.202 indicates that this relationship is not statistically significant at the 0.05 level.
Assessing the impact of inflation on the purchasing power of Lower-, Middle- and Upper-class individuals in Hyderabad.
Current annual household income * Inflation affected your daily expenses and cost of living Crosstabulation.
Illustrations are not included in the reading sample
- Among respondents with household incomes less than ₹2,00,000, there is a relatively lower proportion who strongly agree or agree with the statement compared to other income groups.
- ₹200,000 to below ₹500,000 it suggests that as household income increases from the lower income bracket to the above ₹200,000 to below ₹500,000 bracket, there is a corresponding increase in the perception that inflation impacts daily expenses and cost of living.
- Above ₹5,00,000-Below ₹7,50,000 Household Income: Respondents in this income bracket show a similar trend, with the majority (27 out of 32) strongly agreeing or agreeing that inflation affects their daily expenses and cost of living.
- Respondents with higher household incomes tend to show higher levels of agreement with the statement. For example, the proportion of respondents strongly agreeing or agreeing increase as household income increases, reaching its peak in the ₹750,000 to 1000000 income brackets.
- Null hypothesis: There was observed no impact of inflation on the purchasing power of lower-, middle- and upper-class families.
- Alternative hypothesis: There was significant impact of inflation that has been observed on the purchasing power.
Chi- square test:
Illustrations are not included in the reading sample
If the p-value in a chi-square test is 0.940, it means that the observed data is very likely to occur under the assumption of the null hypothesis A p-value of 0.940 indicates a high probability that the observed results are due to chance alone.
With such a high p-value, we fail to reject the null hypothesis, which typically states that there is no association between the variables,
Correlation test:
Symmetric measures
Illustrations are not included in the reading sample
In this case, the Pearson correlation coefficient of 0.035 suggests a weak positive correlation between annual income and household expenses. While there is a positive relationship between the two variables, the strength of the relationship is very weak. This means that as annual income increases, there is a slight tendency for household expenses to increase, but the relationship is not strong enough to make a significant impact on household expenses based solely on income in regards to inflation.
A Spearman correlation coefficient (ρ) of 0.024 suggests a very weak positive monotonic relationship between annual income and household expenses or cost of living, it should normally range between -1 to +1, it is also important to recognize that other factors beyond income likely play a more significant role in determining expenses and cost of living i.e., inflation.
Investigating how fixed income, pensions and social securities are affected by inflation particularly in Hyderabad.
4.1: Classification of the number of people who receive pension based on the parameter of gender.
Gender*currently receiving a fixed income or pension Crosstabulation
Illustrations are not included in the reading sample
Among females, 48 out of 72 respondents (66.67%) are not currently receiving a fixed income or pension, while 24 out of 72 respondents (33.33%) are currently receiving a fixed income or pension.
Among males, 39 out of 52 respondents (75.00%) are not currently receiving a fixed income or pension, while 13 out of 52 respondents (25.00%) are currently receiving a fixed income or pension.
Overall, out of the total 124 respondents, 87 (70.16%) are not currently receiving a fixed income or pension, while 37 (29.84%) are currently receiving a fixed income or pension. A higher proportion of males (25.00%) are receiving a fixed income or pension compared to females (33.33%).
4.2: Satisfaction analysis of the people who receive pensions based on the parameter of gender.
Gender * satisfied with the stability of your fixed income or pension payments
Illustrations are not included in the reading sample
Among Females:
19 out of 72 respondents strongly disagree with the stability of their fixed income or pension.
11 out of 72 respondents disagree.
33 out of 72 respondents are neutral and not that satisfied with the income or pension they receive.
7 out of 72 respondents agree that means they are satisfied.
2 out of 72 respondents strongly agree which means they are excessively satisfied and happy with the pension they receive.
· Among males:
18 out of 52 respondents strongly disagree which means they are not satisfied at all.
6 out of 52 respondents disagree which means they do not feel their pension stable enough for a good livelihood.
14 out of 52 respondents are neutral which means they are somewhat happy with what they are receiving.
11 out of 52 respondents agree which means they are likely satisfied with the pension they receive.
3 out of 52 respondents strongly agree which means they are excessively happy and satisfied with the amount of pension they receive.
A considerable proportion of respondents (67.55%) express dissatisfaction (strongly disagree, disagree, or neutral) with the stability of their fixed income or pension and (32.45%) express satisfactory reviews.
- Null hypothesis: We do not find relative effect on peoples pensions due to inflation.
- Alternative hypothesis: Through mere investigation over the matter, we find that pensions of pension holders are affected due to inflation
Chi-square test:
Illustrations are not included in the reading sample
If the p-value is less than a chosen significance level (often 0.05), then you reject the null hypothesis. This would suggest that there is evidence to support an association between gender and satisfaction with the stability of pension.
If the p-value is greater than the chosen significance level, you fail to reject the null hypothesis. This would indicate that there is not enough evidence to conclude that there is an association between gender and satisfaction with the stability of pension
FINDINGS, SUGGESTIONS & CONCLUSION
FINDINGS:
Through statistical analysis multiple essential findings appear about how inflation affects different financial situations of individuals:
1.The grocery industry presently shows substantial price increases because essential household items and foodstuffs have become more expensive. Consumer basic needs expenses have substantially increased due to elevated price levels throughout the economy.
2. Middle-class earners have experienced a discernible improvement in their financial standing when juxtaposed with other socioeconomic brackets. This trend suggests a notable shift in economic dynamics within the middle-income demographic, possibly driven by factors such as increased employment opportunities or wage growth.
3.The middle-class population endures larger losses than their peers because inflation causes negative consequences to their daily costs as well as their purchasing ability. Middle-income families must deal with increasing expenses as their earnings remain static because inflation grows faster than their wages.
4. The pensioner community shows neutral attitudes toward their benefits as a significant percentage evaluates them with detachment. The respondents demonstrate a complex understanding of pension benefits by showing acknowledgment for receiving financial help from their pensions while expressing doubts about its current level of adequacy due to inflationary forces and changes within the economy.
These observations demonstrate how inflation affects various population segments in multiple complex financial ways which require complete economic policy solutions and social assistance to safeguard monetary stability.
SUGGESTIONS:
- The government needs effective communication about inflation rates since these rates impact economic policies substantially and affect public trust.
- The practice of transparent communication establishes trust together with allowing people and enterprises to make precise choices based on accurate information.
- The establishment of official inflation rates should incorporate awareness about different economic circumstances affecting various groups of people.
- Wealth distribution in society determines how household expenses rise since lower-income families suffer more than upper-income families do.
- The adoption of social protection systems along with tax systems that progress according to income level enables marginal communities to overcome their inflation-based economic hardships.
- The aim of these interventions is to support fairness as well as economic inclusivity.
- The public needs immediate proactive action to enhance awareness about inflation rates and engage in related conversation.
- Through public education and outreach initiatives people can receive proper explanations to dispel false information and conduct meaningful discussions.
- Increased public awareness allows people to discuss policy matters related to inflation with better knowledge.
- Economic stability and national prosperity result from this system because it builds government confidence levels as well as economic resilience.
CONCLUSION:
Social economic classes of Hyderabad display different patterns of inflation alongside income behavior based on this study. The discrepancies reveal the complex relationship between inflation and purchasing power especially among individuals belonging to lower, middle and upper-class groups.
Individuals who belong to lower-income groups that face restricted financial means stand at highest risk to see their purchasing power decline because of inflationary price rises. People facing affluence restrictions encounter difficulties obtaining necessary products which could trigger worsening financial situations. The purchasing power of middle-class individuals faces challenges when inflation occurs since it erodes their ability to sustain their current life standards forcing them to modify their spending patterns. The higher income of people in upper-class backgrounds reduces their direct exposure to inflation but they inevitably adjust their consumption habits when economic conditions change.
Strategic interventions need policymakers alongside business stakeholders to observe these social dynamics when designing solutions that address unique requirements of separate socioeconomic strata. When policymakers understand how inflation distorts purchasing power levels between income classes they generate more successful economic strategies that protect marginalized groups from inflation's negative effects. Businesses should modify their advertising approaches together with product lines to provide better service to customers whose purchasing power has altered because of inflation.
A study demonstrates that pensioners show dissatisfaction with their fixed pension payment reliability stemming mainly from inflation impacts. Retired individuals feel concerned because the growth of their pension funds falls short of the growing expenses. The value of pension money diminishes through inflation which creates financial challenges for pension recipients in maintaining both their money management and essential expenses. The resolution of this problem must be addressed to guarantee financial security and high standard of living for elderly individuals.
REFERENCES:
1. Jain, M. P., Sharma, A., & Kumar, M. (n.d.). Recapitulation of Demand-Pull Inflation & Cost-Push Inflation in An Economy. In Journal of Positive School Psychology (Vol. 2022, Issue 4). http://journalppw.com
2. Patnaik, I., Shah, A., & Veronese, G. (n.d.). How Should Inflation Be Measured in India?
3. Suruliraj, I., Suresh Babu, N., Thowseaf, S., & Thawab, M. A. (n.d.). AN EXPLORATORY STUDY ON CUMULATIVE PERFORMANCE INDEX OF INFLATION AT RURAL AND URBAN AREAS OF INDIA AND ITS INFLUENCE ON INDIA’S INFLATION. Turkish Journal of Physiotherapy and Rehabilitation, 32 (3). www.turkjphysiotherrehabil.org
4. Barnett, W. A., Jawadi, F., & Ftiti, Z. (2020). Causal relationships between inflation and inflation uncertainty. Studies in Nonlinear Dynamics and Econometrics, 24 (5). https://doi.org/10.1515/snde-2019-0094
5. Bhattacharya, R., Gupta, A. Sen, & Sen Gupta, A. (2015). Food Inflation in India: Causes and Consequences. www.nipfp.org.in
6. Ellis, J., & Wands, D. (2023). Inflation (2023). http://arxiv.org/abs/2312.13238
7. Siami-Namini, S., & Hudson, D. (2019).Inflation and income inequality in developed and developing countries. Journal of Economic Studies, 46 (3), 611–632. https://doi.org/10.1108/JES-02-2018-0045
8. Ehrmann, M., Pfajfar, D., & Santoro, E. (2017). Consumers’ attitudes and their inflation expectations. International Journal of Central Banking, 13 (1), 225–259. https://doi.org/10.17016/feds.2015.015
9. Armendariz-Picon, C., Damour, T., & Mukhanov, V. (1999). k-Inflation. In Physics Letters B (Vol. 458).
10. Mohanty, D., & John, J. (2015). Determinants of inflation in India. Journal of Asian Economics, 36, 86–96. https://doi.org/10.1016/j.asieco.2014.08.002
11. Anand, R., Ding, D., & Tulin, V. (2014). Food Inflation in India: The Role for Monetary Policy.
12. Goel, D. (2018). Measures of Inflation in India. Journal of Business Thought, 9, 24–45. https://doi.org/10.18311/jbt/2018/21171
13. Jaravel, X. (2021). Inflation Inequality: Measurement, Causes, and Policy Implications. https://doi.org/10.1146/annurev-economics
14. Glawe, L., & Wagner, H. (2024). Inflation and inequality: new evidence from a dynamic panel threshold analysis. International Economics and Economic Policy. https://doi.org/10.1007/s10368-023-00580-x
15. Binder, C. (2019). Inequality and the inflation tax. Journal of Macroeconomics, 61. https://doi.org/10.1016/j.jmacro.2019.103122
16. Bhunia, A. (2016). How Inflation and Interest Rates Are Related to Economic Growth? A Case of India. Journal of Finance and Accounting, 4 (1), 20–26. https://doi.org/10.12691/jfa-4-1-3
17. MPhil Scholar, S. I. (n.d.). A COINTEGRATION AND ERROR CORRECTION APPROACH TO THE DETERMINANTS OF INFLATION IN INDIA. www.ijeronline.com
18. Veni, K., & Choudhury, P. K. (2007). Inflation and Growth Dilemma: An Econometric Analysis of the Indian Economy.
19. Paul, M., & Sharma, P. (n.d.). Inflation rate and Poverty: Does poor become poorer with inflation? https://ssrn.com/abstract=3328539
[...]
- Quote paper
- M. Arul Jothi (Author), 2024, The Interplay Between Inflation and Income. A Thorough Investigation, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/1577583
