Page 49 - DHC Budget Book 2021-22 Final

Prices and Inflation
The economy has been witnessing moderation in inflation since 2014. However, recently inflation dynamics have revealed a drastic surge in 2020. Overall, headline CPI inflation remained high during the lockdown period and subsequently as well, due to the persistence of supply side disruptions. At the global level, inflation remained benign on the
back of subdued economic activity as a result of COVID-19 outbreak and sharp fall in international crude oil prices in advanced economies (AE). In Emerging Markets and Developing Economies (EMDEs), there was slight fall in inflation on account of weaker economic activity, though there has been uptick in inflation in some economies ending at similar levels as in the previous year (IMF, 2020) (Figure 4)
12
10 8 6 4 2 0
United States
Other adv. Economies
India Euro area
EMDEs
Source: World Economic Outlook, October 2020 Update, IMF
Note: *The figure for 2020 is projected by IMF
Advanced Economies include 16 economies and EMDEs include 156 economies as per IMF classification Figure 4: Annual Average Consumer Price Inflation in Advanced Economies and EMDEs
Headline Consumer inflation measured by Consumer Price index (CPI) averaged 6.6 % in 2020-21 (Apr-Dec) and stood at 4.6 per cent in December 2020 as compared to 4.1% for the corresponding period of 2019-20. The exponential uptick was mainly driven by rise in food inflation (Refer Figure 5), which has increased from 6.7 per cent in 2019-20 to 9.1 per cent in 2020-21 (Apr- Dec), owing to build up in vegetable prices. The
difference in rural-urban CPI inflation, which was high in 2019, saw a decline from November 2019 continuing in 2020.
2020-21
Contrastingly, Wholesale Price Index (WPI) inflation
which had shown an increase between 2015-16
and 2019-20, astonishingly showed negative trends
for continuous 7 months during Covid-19 induced lockdown and stood at -2.36% in May 2020.
2020-21 (Apr-Dec)
2019-20 (Apr-Dec)
2020-21 (Apr-Dec)
2019-20 (Apr-Dec)
Miscellaneous, 26.85 Fuel and light, 2.28 Housing, 5.29
Miscellaneous, 26.85 Fuel and light, 2.28 Housing, 5.29
Clothing and footwear, 3.14
Pan, tobacco and intoxicants, 4.01 Food and beverages, 59.02
Source: NSO
Clothing and footwear, Pan, tobacco and intox Food and beverages, 5
Miscellaneous, 26.85 Fuel and light, 2.28 Housing, 5.29
Clothing and footwear, 3.14
Pan, tobacco and intoxicants, 4.01 Food and beverages, 59.02
Figure 5: Contribution of groups to overall CPI-C inflation% in Apr-Dec for 2019-20 & 2020-21
Content
Economic Survey 2020-21 Basic 47
2012
2012
2012
2012
2012
2012
2012
2012
2012
per cent