Economy

Health inflation surged to over 8% in May

Shishir Sinha New Delhi | Updated on June 23, 2021

Baffling is the jump in recreation & amusement, transport & communication inflation

Health inflation surged to over 8 per cent in May compared to around 6 per cent in January — a rise that could be attributed to increase in prices of medicines, charges for X-ray, ECG, pathological tests, doctors fee, etc. However, what has baffled analysts is that transport and communication and recreation and amusement inflation has also seen a jump. Headline inflation rate for May stood at 6.3 per cent.

All these are part of retail inflation based on the consumer price index (CPI) released every month. However, the focus is always on headline inflation, besides inflation related to food and overall core inflation (headline excluding food and fuel inflation). Itemised inflation numbers for health etc. do not get much attention, though they have become more important since last fiscal due to Covid-19.

Rise in hospital charges

Data from Consumer Price Indices Warehouses of Statistics Ministry show that the rate of retail inflation for hospital and nursing home charges rose to 5.27 per cent in February this year from 4.36 per cent in last June. Similarly, for medicine, it went up to 6.88 per cent from 5.29 per cent; for doctors/surgeons fee-first consultation, it rose to 6.09 per cent from 4.51 per cent and for X-ray, ECG, pathological tests, etc., to 4.26 per cent from 2.77 per cent. Since figures for April and May 2020 were not complete, item-wise annual inflation data for April and May 2021 have not been computed.

 

Many research reports have highlighted health expenses rising during current year, too. In fact, on month-on-month basis for 2021, Statistics Ministry data show retail inflation for health has been on the rise since January. Earlier, an SBI research report said that health expenditure, currently at 5 per cent of overall PFCE (Private Final Consumption Expenditure), could increase by at least 11 per cent from the current level.

Yuvika Singhal, Economist with QuantEco Research said that the rise in health inflation is likely a manifestation of Covid’s second wave on medical expenses. “Not only does itemised CPI data reflect a robust price build-up for medicines, hospital charges, doctor’s fees and medical tests in May 2021; but from anecdotal evidence, we know of consumers paying extortionate price for health facilities amidst short supplies which perhaps may not have gotten captured in formal data,” she said.

Strange rise

However, rise in inflation rates for transport & communication and for recreation & amusement are difficult to understand. Singhal said the upside in recreation and amusement retail inflation is a bit perplexing, amid the curtailed consumption possibilities in a lockdown. “On an itemised based, some of the price increases such as hotel lodging charges (+12.5 per cent m-o-m) and goods for recreation and hobbies (+58.6 per cent) are even harder to rationalise,” she said.

Unlike wholesale price index, CPI captures data related with services too and these are mainly placed under the ‘miscellaneous’ category which comprises of household goods & services, health, transport & communication, recreation & amusement, education, and personal care and effects.

Published on June 23, 2021

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