Economic survey 2021-22 warns India needs to be wary of imported inflation

Economic Survey stresses on making policy decisions based on changing economic realities

February 1, 2022

Economic survey predicts imported inflation a risk

India does need to be wary of imported inflation, especially from elevated global energy prices, The Economic Survey for 2021-2022 has warned.

The Economic Survey states that ‘although the high wholesale price index (WPI) inflation is partly due to base effects and will even out, India does need to be wary of imported inflation, especially from elevated global energy prices.’

While the consumer price index (CPI) or retail inflation has shot up to 5.59 percent in December month as compared to 4.91 percent in the month of November 2021, the RBI has projected retail inflation to peak between January to March of 2021-22.

It adds that inflation has reappeared as a global issue in both advanced and emerging economies. India’s Consumer Price Index inflation stood at 5.6 percent YoY in December 2021 which is within the targeted tolerance band. The wholesale price inflation, however, has been running in double-digits. Although this is partly due to base effects that will even out.

The surge in energy prices, non-food commodities, input prices, disruption of global supply chains, and rising freight costs stoked global inflation during the year.

In India, Consumer Price Index (CPI) inflation moderated to 5.2 percent in 2021-22 (April-December) from 6.6 percent in the corresponding period of 2020-21. It was 5.6 percent (YoY) in December 2021, which is within the targeted tolerance band.

The decline in retail inflation in 2021-22 was led by the easing of food inflation. The wholesale price inflation (WPI), however, has been running in double-digits. The inflation in the ‘fuel and power‘ group of WPI was above 20 percent reflecting higher international petroleum prices. Although the high WPI inflation is partly due to base effects that will even out, India does need to be wary of imported inflation, especially from elevated global energy prices, the Economic Survey said.

[With Inputs from IANS]

PGurus is now on Telegram. Click here to join our channel and stay updated with all the latest news and views

For all the latest updates, download PGurus App.