Drop In Retail Inflation – Economics – Free PDF Download

 CURRENT AFFAIR

• According to the Consumer Price Index (CPI) data released by the National Statistical Office (NSO), the retail inflation in March 2020 dropped to 5.91% due to decrease in demand and lowered food prices.

DETAILS

• Retail inflation (or CPI-based inflation) decreased to 5.91% in March 2020 from 6.58% in February 2020.
• The retail inflation rate was based on 66% of the usual price quotations as the nationwide lockdown to counter Covid-19 pandemic had led to suspension of fieldwork for price collection after March 19,2020.
• The inflation rate in March 2020 remained within the Reserve Bank of India’s (RBI’s) medium-term target of 4±2% for Consumer Price Index (CPI) inflation.
• Due to suppressed demand
• This inflation range (4% within a band of +/- 2%) was recommended by the committee headed by Urjit Patel in 2014.
• Fuel and Light segment:
• The inflation rose to 6.59% from 6.36% in February 2020.
• Food inflation moderated to 8.76% from 10.81% in March 2020.
• The food price inflation of various items like vegetables, spices, pulses continue to be in double digits.
• Pressure is expected due to the shortages witnessed in different centres with mandi arrivals being affected due to lockdown.
• According to economists, inflation is expected to be brought down by low energy prices and subdued economic activity.
• However, the food price inflation of 8.7% will tend to increase.

MONETARY POLICY EXPECTATIONS

• It is expected that the Reserve Bank of India (RBI) undertakes further repo rate cuts.
• Repo Rate is the rate at which the RBI lends money to commercial banks in the event of any shortfall of funds.

Inflation

• Inflation refers to the rise in the prices of most goods and services of daily or common use.
• Inflation measures the average price change in a basket of commodities and services over time.
• Inflation is indicative of the decrease in the purchasing power of a unit of a country’s currency.
• A moderate level of inflation is required in the economy to ensure that production is promoted.
• In India, the Ministry of Statistics and Programme Implementation measures inflation.
• In India, inflation is primarily measured by two main indices — WPI (Wholesale Price Index) and CPI (Consumer Price Index).

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