The situation of India's common man has slowly grown to become problematic. We have been seing rise in the prices of commodities which will continue to do in the future. Fuel being one of the most important commodities of any household looks to give a headache. It affects our pockets more than we actually feel.
Let's see the 4 common ways how the petrol prices affect your pockets and more importantly your savings :
1. Fuel Expenses :
This is a no-brainer for all of us. Fuel expenses form a major chunk of our total expenses and a very important one. If we go through a few calculations, a person driving 900 km every month to and fro his office by car will have to pay around Rs. 600-750 more. This cost is something you can't do much about. The person will anyway not switch to public transport.
Takeaway: The fuel expense will lead to having fewer savings or cutting down on other household or personal expenses to maintain the balance, considering there's no significant increase in the salary.
2. Essential commodities and goods :
Record high prices for diesel mean that the cost of transporting goods goes up across the country. In turn, the prices of essential commodities like fruit and vegetables as well as other goods increases. No wonder why lemons prices are soaring.
Takeaway: You will have to spend more to buy everyday goods which will increase the pressure on your savings and investment. Expenses will take a large share out of the income and doesn't seem to cool down in the near future. As you may know, the upward rise in prices of branded goods barely comes down. The same applies to the prices of public transport, auto rickshaws, etc.
3. Interest rates :
A rise in the price of petrol leads to inflationary pressure on the economy and this is usually countered by RBI by raising the interest rates. The rise in interest rates makes taking up loans a costly affair but at the same time, it makes saving in a bank account much more rewarding than it is right now.
Takeaway: When the loans get costlier, people use their savings to undertake construction activities and to pay a share of downpayment of the new car. Thus having a good amount of savings saves you from taking out costlier loans.
4. Foreign travel, education and trade due to the depreciating rupee.
As crude oil prices go up, automatically we see pressure on the cost of imports going up, deficit increases and the rupee comes under pressure.So if someone is planning a holiday or planning to study outside India, the depreciating exchange rate will start showing effect.
Takeaway : You will have to cough up more rupees to execute all the travel plans outside India. (Rather travel across India).
Hope this was an interesting read for you.
Have an amazing day ahead