India needs to be wary of imported inflation: Economic Survey

Inflation has reappeared as a global issue in both advanced and emerging economies and India needs to be wary of imported inflation especially due to high oil prices according to the Economic Survey 202122 released on MondayInflation has reappeared as a global issue in both advanced and emerging economies Indias Consumer Price Index inflation stood at 56 per cent YoY in December 2021 which is within the targeted tolerance band the survey report presented in the Parliament by Finance Minister Nirmala Sitharaman notedWholesale price inflation however has been running in doubledigits Although this 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 it saidWholesale inflation based on Wholesale Price Index WPI after remaining very benign during the previous financial year on account of pandemic induced weakening of economic activity record low global crude oil prices and weak demand witnessed a sharp uptick rising to 125 per cent during AprilDecember period of the current financial yearWhile WPI inflation has been higher in the current financial year compared to the previous year in all the three major groups it was above 20 per cent in the fuel and power group reflecting the high international petroleum prices as mentioned earlierWithin the primary articles group lsquocrude petroleum amp natural gas subgroup has witnessed very high inflation and stood at 557 per cent in December 2021 Similarly minerals have witnessed high inflation throughout the year The impact of rising international prices in WPI manufacturing was clearly visible especially in manufacture of basic metalsRetail inflation as measured by Consumer Price Index stood slightly above 6 per cent in 202021 owing to supply chain disruptions caused by Covid19 restrictions lockdowns and night curfews moderated during the current financial year Retail inflation during 202122 AprilDecember stood at 52 per centDuring the current financial year retail core inflation inflation excluding food and beverages and fuel and light the transitory components of the index has shown a rising trend Average core inflation for the period AprilDecember 2021 stood at 59 per cent as against 54 per cent in the corresponding period last yearUnlike 202021 AprilDecember when food and beverage drove inflation during 202122 April to December the major drivers of retail inflation have been miscellaneous and fuel and light group The contribution of miscellaneous groups has increased from 268 per cent in 202021 AprilDecember to 35 per cent in 202122 AprilDecember and the contribution of fuel and light increased from 23 per cent to 149 per cent Figure 5On the other hand during the same period the contribution of food and beverages declined from 59 per cent to 319 per cent Within the miscellaneous group subgroup transport and communication contributed the most followed by healthIndia imports around 60 per cent of its consumption of edible oils and Palm oils Crude Refined constitute around 60 per cent of the imports of edible oils As a result fluctuation in imports and international prices transmit to domestic prices of edible oilThe current spike in prices of edible oils is mainly on account of high and increasing international prices of edible oils the survey report saidThe rise in the oil component of the Food and Agriculture Organisations FAO food price index from May 2020 onwards has been steep and reached a 10year high due to robust global import demand amidst the shortages over migrant labour impacting production in Malaysia it notedThis story has been sourced from a third party syndicated feed agencies Midday accepts no responsibility or liability for its dependability trustworthiness reliability and data of the text Midday managementmiddaycom reserves the sole right to alter delete or remove without notice the content in its absolute discretion for any reason whatsoever