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India’s Inflation rate at 17-month high

  • Published
    15th Apr, 2022

Recently released Consumer Price Index (CPI) inflation was at a 17-month high of 6.95% leading to growing concern over household consumption, saving and overall growth.


CPI Inflation

  • It is an index measuring retail inflation in the economy by collecting the change in prices of most common goods and services used by consumers.
  • The change in the price index over a period of time is referred to as CPI-based inflation, or retail inflation.
  • Generally, CPI is used as a macroeconomic indicator of inflation, as a tool by the central bank and government for inflation targeting and for inspecting price stability, and as deflator in the national accounts.
  • CPI Calculation formula: CPI = (Cost of basket divided by Cost of basket in the base year) multiplied by 100.
    • Base Year: The base year for CPI is 2012.
  • Published by: The CPI-based inflation data is compiled by the Ministry of Statistics and Programme Implementation (or MoSPI).
  • CPI data is used by Monetary Policy Committee (MPC)to control inflation.
  • Reserve Bank of India (RBI) had adopted the CPI as its key measure of inflation in April 2014.

Consumer price index numbers in India

  • In India, there are four consumer price index numbers, which are calculated, and these are as follows:
    • CPI for Industrial Workers (IW)
    • CPI for Agricultural Labourers (AL)
    • CPI for Rural Labourers (RL) and
    • CPI for Urban Non-Manual Employees (UNME)
  • While the Ministry of Statistics and Program Implementation collects CPI (UNME) data and compiles it, the remaining three are collected by the Labour Bureau in the Ministry of Labour.

Responsible factor

  • Price rise and inflation rates during the Covid-19 pandemic
  • Ongoing Russia-Ukraine war has complicated the situation as several countries across the world are facing worsening supply bottlenecks.

Situation in other nations

  • India is not the only countrythat has been witnessing rising inflation.
  • Developed nations such as the US, the UK, and China are also grappling with spiralling commodity prices.
  • While India's neighbours Pakistan and Sri Lanka are encountering the worst economic crisis, South Korea is also facing the issue of inflation.
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