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  • The Consumer inflation has came down considerably in this quarter this is due to the targeting Regime.
  • At the same time it is difficult to say that this trend will continue or not.

Concerns regarding Future

  • The Consumer Price Index mainly target the food products as the agriculture in India is predominantly rainfed, a below average monsoon can ruin these trends.
  • Upcoming year is an election year for parliament, which means government is going to increase spending which could possibly add the numbers to the existing value.
  • The Implementation of 7th Pay commission reforms and increase in salary will increase the spending considerably.
  • The Housing reforms and other developmental schemes going to increase the government spending, schemes like PMAY, PMGSY, NHPS. Will not only increase spending and will also save money in the hands of public.

Background

  • Inflation in general terms means consistence increase in price of a basket of goods and services. Over a period of time, Typically a year

The Different types of Inflation:

CAUSE BASEDRATE BASED
Demand Pull InflationCreeping Inflation
Inevitable in Developing Economy
Cost Push InflationTrotting Inflation
Rates are Double digit
Pricing Inflation PowerGalloping inflation
Rate are Triple Digit
Hyper Inflation (due to pointing of excess currency)

The Different measures of Inflation are:

Wholesale Price Index:

  • Released by Office of Economic Affairs, Ministries of Commerce and Industries.
  • Consumer Price Index – AL & Consumer Price Index – IW  released by Labour Bureau Ministry Labour and Employment
  • Consumer Price Index (Combined) – Released by CSO, Ministry of Statistics and Program Implementation. It is a good measure of Retail Inflation.

Core Inflation: The measure of basket of products without taking food and fuel (as the prices are inconsistent).

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