India has witnessed a steady rise in health inflation in the last few months even as overall inflation has fallen. In fact in January 2019, health as a contributor to inflation even surpassed education and housing. While India’s housing inflation is still above 5 percent it is likely to decline further with abating impact of 7th pay commission implementation.
Housing inflation, which hit a peak of 8.50% in April following the implementation of the Seventh Pay Commission’s recommendations, has since fallen steadily and came in at 5.1% in January, which is an 18-month low.
“After having been constant from Dec’17 to Jun’18, house-rent inflation is now falling, and touched 5.1% in Jan’19. Given the advantage of a high base, this particular category of inflation is likely to stay low till this financial year end,” said Sujan Hajra, Chief Economist at Anand Rathi in a brokerage report.
Source: Anand Rathi
Source: Anand Rathi
In fact health costs in India are rising at double the inflation rate. A report by Mercer Marsh Benefits said forecasted medical trend rate will be 10 percent in India, while inflation will be at 5 percent. Of this, outpatient expenses including medical check-ups, doctor fees, and medicines account for a higher chunk than the actual hospitalisation expenses.
Ghosh said the increase in health inflation could be due to a combination of methodological changes in data collection and implementation of the govt programme Ayushman Bharat to provide health insurance coverage to 10 lakh poor and economically backward families. The scheme might have led to an upgradation of health services at least in rural areas.
Of these indicators, medicine (non-institutional) — which alone accounts for 68 per cent of the health index — had risen from 4.5 per cent in January 2018 to 10 per cent in December. This suggests that much of the recent upward trend observed in health inflation is on account of the rise in this indicator.
Now, medicine (non-institutional), in turn, is based on prices of pain-killer tablets, cough syrup, vitamin b complex, anti-fever and antibiotics, among others.
But prices of these items have not risen in line with what is observed from the index, experts told BS.