In an exclusive interaction with Adlin Pertishya Jebaraj, Correspondent of Finance Outlook India, Chakrivardhan Kuppala, Chakravarthy V, Co-founders and Executive Directors of Prime Wealth Finserv, shares how inflation is now a fragmented occurrence on a day-to-day basis. They lay emphasis that the consumers, CFOs and investors have to focus on category-specific spending patterns to protect purchasing power in an increasingly complex economic environment.
Chakravarthy V. & Chakrivardhan Kuppala with over 18 and 12 years of combined experience in advising affluent individuals on all areas of personal finance, such as investment, retirement, educational funding, and portfolio management, as well as alternative investment and insurance products.
How would you characterize today’s inflation cycle, and why are traditional inflation models proving unreliable for long-term financial planning?
If one looks only at significant data, inflation in India appears almost benign. In late 2025, headline CPI inflation fell to around 0.25–0.7%, among the lowest readings in decades. This sharp drop was driven largely by food prices, which declined steeply, pushing food inflation close to –5%. As food carries a heavy weight in India’s CPI basket, the overall inflation number fell sharply.
Yet, everyday costs told a very different story. Rent, school fees, medical expenses, and electricity bills did not decline. Housing inflation remained near 3%, education around 3.4%, and healthcare close to 3.6%. Traditional inflation models assume prices broadly rise or fall together in response to demand and wage changes. That assumption no longer holds.
India’s labour market is fragmented, wages do not move uniformly, and technology alters costs unevenly across sectors. As the Reserve Bank of India has repeatedly indicated, headline inflation increasingly conceals more than it reveals. Inflation today is no longer a single cycle - it is a collection of overlapping price movements behaving very differently across categories.
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What financial risks arise if policymakers continue relying on legacy inflation indicators that fail to capture technology and energy-driven cost shifts?
The central risk of relying on legacy inflation indicators is the illusion of stability. When food prices fall, headline inflation looks low, even though most structural costs continue rising. In late 2025, overall inflation stayed below 1%, yet households faced steady increases in housing, healthcare, and education expenses.
Wholesale inflation added further confusion. WPI inflation hovered around –1.2%, suggesting falling producer prices. However, this did not reflect business realities. Electricity costs, logistics expenses, and imported input prices remained under pressure. When policy frameworks focus primarily on important CPI or WPI, these mismatches are easily missed.
The danger is not permanent misinterpretation, but delayed recognition. Cost pressures quietly accumulate within corporate margins and government finances before surfacing in consumer prices. By the time inflation becomes visible in headline data, adjustments tend to be abrupt rather than gradual. In this sense, inflation indicators increasingly behave as lagging signals, reducing their usefulness as early warning tools.
How should households planning savings, retirement, and education funding recalibrate assumptions around real returns in this evolving inflation environment?
For households, inflation is not experienced as a single number - it is experienced through monthly expenses. In 2025, falling food prices pulled headline inflation close to zero. But households do not spend only on food. School fees rose by roughly 3.4%, healthcare costs by 3.6%, and housing expenses by nearly 3%. These costs are essential and rarely reverse.
This disconnect explains why inflation feels persistent even when official numbers appear low. A low inflation rate does not mean the cost of living has stopped rising; it simply means some prices declined temporarily. Over a lifetime, expenses such as education, housing, and healthcare tend to rise steadily and compound.
As a result, “real returns” have become harder to interpret. Financial growth may exceed headline inflation on paper, yet still fall short of covering rising long-term costs. Inflation now acts less like a broad tide lifting all prices and more like targeted pressure points that slowly erode purchasing power in specific areas.
How are AI-driven productivity gains and automation simultaneously suppressing certain costs while structurally increasing others across key sectors?
AI does not move prices in a single direction—it separates them. In sectors such as IT services, digital payments, logistics, and customer support, automation lowers costs. Once systems are implemented, firms can scale output without hiring proportionally more workers, limiting price increases.
At the same time, AI introduces new and lasting cost layers. Companies invest heavily in cloud infrastructure, data storage, cyber security, specialized software, and electricity. These are recurring expenses rather than one-time investments. Demand for AI-skilled workers also pushes up wages for a small segment of the workforce, even while overall wage growth remains subdued.
The result is uneven inflation. Prices decline where automation replaces labour efficiently, but rise where energy consumption, capital intensity, and specialized skills dominate. AI does not reduce overall inflation - it redistributes it. Some costs quietly fall, while others become structurally higher, making inflation feel fragmented rather than uniform.
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What strategic financial guidance would you offer CFOs and individual investors to protect purchasing power without overexposure to short-term market noise?
Purchasing power was once easier to interpret. High inflation meant money lost value; low inflation suggested stability. That clarity no longer exists. In late 2025, inflation hovered near zero, yet many households and businesses felt little relief.
The reason lies in uneven price movements. Food prices declined temporarily, but rent, healthcare, education, and electricity did not. Wholesale prices softened, but household expenses remained firm. A single inflation number cannot capture these differences.
For both CFOs and individuals, purchasing power today depends more on spending patterns than headline averages. Two households facing the same inflation rate can experience very different realities based on where their money goes. Inflation is no longer a shared economic experience - it has become personal, uneven, and category-specific. Understanding this shift is more important than reacting to short-term fluctuations in any one index.
