Retail inflation remains moderate during current year, says Economic Survey
Jan 31, 2022
New Delhi [India], January 31 : The retail inflation, as measured by Consumer Price Index-Combined (CPI-C) has moderated to 5.2 per cent in 2021-22 (April-December) from 6.6 per cent in the corresponding period of 2020-21, says the Economic Survey 2021-22 presented by Finance Minister Nirmala Sitharaman in the parliament on Monday.
The Survey also says effective supply-side management kept prices of most essential commodities under control during the year.
Regarding domestic inflation, compared to many Emerging Markets and Developing Economies (EMDEs) and advance economies, the survey finds that Consumer Price Index - Combined (CPI-C) inflation in India has remained range-bound in the recent months, touching 5.2 per cent in December 2021.
"This was possible largely because of the proactive steps taken by the Government for effective supply management," the release said.
The Economic Survey said that in 2021, inflation picked up globally as economic activity revived with the opening up of economies.
Inflation surged from 0.7 per cent in 2020 to around 3.1 per cent in 2021 in the advanced economies. Inflation in the USA touched 7.0 per cent in December 2021, the highest since 1982. In the UK, it hit a nearly 30 years high of 5.4 per cent in December 2021. Among emerging markets, Brazil witnessed inflation of 10.1 per cent in December 2021 and Turkey also saw double-digit inflation touching 36.1 per cent. Argentina has been experiencing inflation rates above 50 per cent during the last 6 months.
Retail inflation, well within the target limits of 2 per cent to 6 per cent, declined to 5.2 per cent as against 6.6 per cent during April - December 2020-21. The Survey states that this was largely attributed due to the easing of food inflation. Food inflation, as measured by the Consumer Food Price Index (CFPI), averaged at a low of 2.9 per cent in 2021-22 (April-December) as against 9.1 per cent in the corresponding period last year.
The Survey says that "refined" core inflation has been constructed to exclude the volatile fuel items.
The items of "petrol for vehicle" and "diesel for vehicle" and "lubricants & other fuels for vehicles", in addition to "food and beverages" and "fuel and light" have been excluded from headline retail inflation.
Since June 2020, refined core inflation has been much below the conventional core inflation, indicating the impact of inflation in fuel items in the "conventional" core inflation measure.
The Survey notes that the gap between rural and urban CPI inflation declined in 2020 as compared to the higher gaps witnessed from July 2018 to December 2019. The factor largely responsible for divergence, for brief time periods, is the component of food and beverages.
WPI inflation has shown an increasing trend and has remained high during the current financial year touching 12.5 per cent during 2021-22 (April - December). The Survey describes that part of the high inflation could be because of a low base in the previous year as WPI inflation has been benign during 2020-21.
The Survey observes that the crude petroleum & natural gas sub group under WPI has witnessed very high inflation and stood at 55.7 per cent in December 2021. Within manufactured food products, edible oils were a major contributor.
