Inflation Hits Harder Than You Think

The Hidden Tax We All Pay: Inflation in Everyday Life

We often focus on direct and indirect taxes, but there’s a third, often overlooked, drain on your money: inflation. It’s not a formal tax but it quietly and consistently erodes your purchasing power.

This sharp rise often outpaces official inflation figures by a wide margin.

The real problem? Prices keep climbing, but salaries rarely rise in proportion. Unless your investments are actively beating inflation, you're gradually losing ground, working harder just to maintain the same standard of living.

Understanding Inflation vs. Deflation: It’s Not What You Think
When inflation drops from 10% to 5%, many feel a sense of relief. But this doesn’t mean prices are falling, it simply means they’re increasing at a slower pace. For instance, if something cost ₹100 last year, it would rise to ₹110 with 10% inflation, and then to ₹115.5 the following year at 5%. The price continues to climb, the rate of increase has just moderated.

Actual price declines—deflation—are rare and typically feared by economists. Deflation slows spending, weakens demand, and disrupts growth. Central banks work hard to avoid it by ensuring some inflation stays in the system. But when inflation runs too hot, interest rates are raised to rein it in.

Your Real Tax Burden: Beyond the Obvious
Once inflation is factored in, your true tax burden is far higher than what your income tax return shows. If your personal inflation rate last year was 15%, that’s effectively a hidden levy on top of all direct and indirect taxes.

In real terms, a large chunk of your working year goes towards covering these visible and invisible costs including inflation, which quietly transfers value out of your pocket. A portion of this may even fund subsidies some necessary, others arguably inefficient.

Today’s Daily Byte

Nifty extended yesterday’s gains with a modest recovery, as markets shifted focus to the US Fed’s policy decision due tonight. While no rate hike or cut is expected, the commentary on the outlook for the next two quarters will be closely watched. Any indication of one or two rate cuts this year could act as a major trigger, especially for emerging markets like India.

Reading Time : 7 Minutes

CNX IT vs NASDAQ 100: A Two-Decade Divergence

India’s IT sector was once the poster child of growth, delivering world-beating returns through the late 90s and early 2000s. At one point, it even outperformed the NASDAQ 100 in US dollar terms. But that momentum hasn’t held. Over the past 15+ years, performance has flattened out, even as global tech boomed.

Reading Time : 2 Minutes