Data | Medical expenses soar after wave two, adding to financial stress


The retail sales inflation rate remained high at 6.26% in June 2021, above the RBI’s upper limit for the second month in a row. A sharp increase in the cost of edible oils (34.7% yoy increase in June) followed by significant increases in the prices of eggs, fuel and lighting, fruit and transportation contributed to the high inflation in June. At the same time, healthcare costs have also increased, particularly during the second wave of the COVID-19 pandemic. Health inflation rose to 8.4% and 7.7% in May and June 2021, respectively, from 3.8% in December 2019. A closer look at the health subgroup indicates a steady increase drug prices (8.6% year-on-year increase in June), medical examinations (6.2%), hospital costs (5.9%) and consultation fees (4.5%). Health spending increased the most in Telangana and the least in Kerala.

Contributing factors

The chart shows the inflation rates for some of the groups and subgroups that contributed the most to the high inflation in June. In addition to edible oils and fats, eggs and fuel, the prices of fruits (11.8% year-on-year increase in June), clothing and footwear (6.2%), and household goods and services (5 , 8%) contributed to the increase.

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Medical bills

The graph shows the inflation rates for all items listed in the health subgroup. While the prices of most medical items increased, the cost of glasses increased the most (9.6% year-on-year) in June.

Data by state

The graph shows the% growth of the health inflation index in June 2021 compared to June 2019 in rural (shown in yellow), urban (shown in green) and all regions (shown in blue) of some states. During this period, healthcare inflation rose to 23% in Telangana and only 7.9% in Kerala, which was the lowest among states with relevant data. In general, health inflation growth was higher in urban areas than in rural areas.

Impact of COVID-19

According to SB1 Research, total healthcare spending is likely to increase by 66,000 crore due to COVID-19, representing 11% of healthcare spending incurred in fiscal year 20. The report states that this increase spending on health care “will also result in spending cuts on other consumer discretionary items.” The report also argued for a better way to measure inflation during a pandemic given changes in consumer spending habits during a health crisis.

Source: MOSPI, SBI research

Also Read: Inflation Will Persist At High Levels For Some Time: RBI Officials

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