n lation and siness le 7.19
Between 2009–13, the headline inflation consumer food price index (CFPI) at 4.2
remained stuck at uncomfortable levels, per cent in 2016-17 (from 4.9 per cent in
primarily due to ‘food articles’ (food 2015-16 and 6.4 per cent in 2014-15).
inflation) led by protein-rich items It was 1.2 per cent for 2017-18 (upto
(protein inflation) in the consequence of December) and 5 per cent for December,
shift in dietary habit, income effect (via 2017. Major drivers of this decline have
MGNREGA kind of schemes), increased been meat and fish, oil and fats, spices,
wages, increase in prices of commodities pulses. Wholesale food price index (WPFI)
in the global market (especially, food also declined to 2.3 per cent in 2017-18
articles), costlier fodder, costlier energy (upto December) as compared to 6.3 per
and fuel, etc. By late 2010, India had cent in 2016-17 (upto December).
the phenomenon of ‘skewflation’ with Core Inflation: While significant
inflation being in the range of 9–10 per moderation has been witnessed in the
cent. headline and food inflation, the CPI
(vii) During 2010s: From 2010–11 to 2013– based core inflation (excluding food
14 inflation remained higher—the and fuel groups) remained above 4 per
average inflation at WPI and CPI was 8 cent during the last four financial years.
per cent and 9.7 per cent, respectively. However, it fell down to 4.5 per cent in
Food inflation, led by protein items, 2017-18 (upto December) from 4.8 per
breached into double digit51. Since mid- cent of 2016-17 (upto December)—by
2014 inflation started moderating—WPI December, 2017 it was at 5.2 per cent.
inflation remained in negative (-5.1 per An analysis of inflationary trends in India
cent by August 2015) and CPI inflation does not pin-point any one reason behind it.
positive of 4.9 per cent end-December Economists have pointed out all possible reasons
2016)—showing a ‘wedge’ of 10 per cent. (the so-called ‘good’ and ‘bad’) behind the
Current trends in inflation has been as given inflationary pressures in the economy of which we
below, as per the Economic Survey 2017-18: may have a brief review:
CPI-C (Headline Inflation): The CPI-C 1. Structural Inflation
(CPI-Combined) inflation declined to
4.5 per cent in 2016-17 from 4.9 per cent With few exceptional years, India has been
in 2015-16 and 5.9 per cent in 2014-15. facing the typical problem of bottleneck inflation
It was at 3.3 per cent for 2017-18 (upto (i.e., structural inflation) which arises out of
December) below the threshold of 4 per shortfalls in the supply of goods, a general crisis
cent. It was 5.2 per cent for December, of a developing economy, rising demand but lack
2017 (as compared to 4.9 per cent of of investible capital to produce the required level
November, 2017 and 3.4 per cent in of goods.52 Whenever the government managed
December, 2016). to go for higher growths by managing higher
investible capital it had inflationary pressures
Food Inflation: Good agricultural
on the economy (seen during 1970s and 1980s,
production and regular price monitoring
by the Government helped to contain 52. esai, eghnad, evelopment erspectives in . .
Ahluwalia and I.M.D. Little, (eds), India’s Economic
51. Ministry of Finance, Economic Survey 2014–15 (New Reforms and Development, (New Delhi: Oxford
Delhi: Government of India, 2015), Vol. 2, pp. 69–75. University Press, 1998), p. 41.