What the article is about :
- The article talks about upwards trend in retail inflation.
Relevance:
- Prelims
- GS3: Indian Economy, inflation and its impacts, monetary policy
Analysis:
- The data released by National Statistical Office showed that retail inflation rose upto 7%, measures by the CPI(Consumer Price Index).
- National Statistical office:
- formation of an overarching body – National Statistical Office (NSO) has been done through the merger of the NSSO and the CSO.
- Earlier known as the Central Statistics Organisation of India, CSO is responsible for the coordination of statistical activities in India, and evolving and maintaining statistical standards.
- NSO is headed by the Ministry of Statistics and Programme Implementation (MOSPI).
- CPI( consumer price index):
- The CPI calculates the difference in the price of commodities and services such as food, medical care, education, electronics etc, which Indian consumers buy for use.
- The CPI has several sub-groups including food and beverages, fuel and light, housing and clothing, bedding and footwear.
Reasons of rise in food inflation:
- Wheat prices are elevated due to the heat wave which impacted output.
- The shortfall in rainfall across the Gangetic plain is expected to adversely impact rice prices.
- Along with it, core inflation also continues to remain elevated.
- Core inflation and headline inflation:
- Headline inflation refers to the rate of change in the CPI, a measure of the average price of a standard basket of goods and services consumed by a typical family.
- Core inflation measures the change in average consumer prices after excluding from the CPI certain items with volatile price movements.
- Core inflation and headline inflation:
Steps taken to control inflation:
- Government had announced a ban on export of wheat, and now it has imposed restrictions on rice shipments as well.
- Monetary policy committee had projected inflation to trend lower, however minutes of last MPC meeting suggested that most of the members were in favour of further interest rate hikes to tackle inflation.
Conclusion:
- Continued inflation is a cause of concern and policymakers may need to act tough and take steps to lower the inflation rate in economy.
