Buying power of US Dollar vs. Rupee. Price of Food, Clothes, Inflation
When I call my parents in India, my Mom asks about prices of vegetables, clothes and other stuff in US. I tell the price in dollars…when I complain about prices of few things in America, she replies saying, “for you guys living in America, one dollar is equal to one rupee…so it is ok…” I right away reply to my mom, “A dollar is never equal to rupee…the buying power of one Dollar is much higher than a rupee in India.” I quote an example saying, “in America, people can get a cheap cheese burger for a dollar or even cheaper taco in taco bell for 80 cents or so…but, what can you buy for a rupee in India…Nothing ! ”. In general, it is not logical to compare both currencies as their value is different, but just trying to explain the perceptions of people about currency. This article is part of the series Settle in US or India and will focus on inflation, cost of various things and how things are changing in America vs. India.
Inflation of USA vs India, Economy growth rate.
If you look at both of these graphs, you get a clear idea of the inflation rates based on consumer price index. In India, the inflation rate is over 10% or hovering around there…whereas in America, the inflation is under 2% and there was deflation in USA during recession. Logically, what is happening is, due to inflation in India prices are going up crazy and the effective buying power of a rupee is decreasing. People who work in IT companies in India, get Salary hikes ranging from 15% to 30% every year, where as in America the average hike per year in salary is around 3%. The logical reason for the disparity in the hike is the inflation. Also, Indian economy is a growth phase and we can expect to have the inflation for the new decade or so…who knows…
You can get good branded clothes in US for relatively less price, depending on sale or time of season….I took out few friends, who came from India few weeks ago, to shopping malls and outlet malls to buy clothes and shoes…they were surprised by the price of clothes and shoes in America….they said US prices were relatively cheap for the good brands they were buying….to add more, food is relatively cheap in America when compared to price of the food with India…Just a note, I am talking about the upper middle class people in India who have an IT job or a well paying job leading a lifestyle of spending money in Malls, multiplexes, etc…
Decision to Live in India vs. USA based on Inflation
On a macro level, based on the inflation data presented above and the continuing growth rate of Indian economy, it is a good idea to stay in America for next decade or so until the Indian economy stabilizes….the sole point of staying in US is based on stable economy and less inflation… If you stay in India and save money, unless you get over 10% interest rate on your savings, your savings money is not enough to meet inflation and it is worth nothing.…Also, you would have to pay lot more money for house interest rates and other stuff…there are so many things, I am just talking on a very high level…
What do you think about Inflation India vs. America ?
Image Credit : http://www.springercreative.com/uploads/preview/Inflation.gif
Data presentation credit : http://www.tradingeconomics.com/Economics/Inflation-CPI.aspx?Symbol=USD