New Delhi: The latest Economic Survey of 2022 released by Finance Minister Nirmala Sitharaman on Monday stated that India’s retail inflation was at 5.2 per cent during FY21-22 from April to December. The Consumer Price Index stood at 5.2 per cent during the year 2021-22, as compared to the 6.6 per cent in the corresponding period last year. The CPI in December 2021 was 5.6 per cent (YoY) which was within the targeted tolerance band.
The wholesale price inflation (WPI), however, ran in double digits and was at 12.5 per cent during this year, the report said. Pick-up in economic activity, steep rise in global crude oil prices and other imported inputs, and high freight costs were attributed to the increased WPI during the FY21-22. Under the ‘fuel and power’ group of the WPI, the inflation was reported to be above 20 per cent which reflected increased petroleum prices at the international level.
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“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 report said.
The report also included that the “decline in retail inflation in 2021-22 was led by easing of food inflation.” One of the reasons that were attributed in the report for the prices being under control was effective supply side management.
Food inflation remained benign during the year at 2.9 per cent (April-December) as against 9.1 per cent in the corresponding period last year. In the case of vegetables, prices of onions and potatoes remained under control, though retail prices of tomatoes witnessed an uptick during September to November 2021 due to untimely rains in major producing states.
At the global level, the report stated that as the economic activities revived in the year 2021, the inflation increased globally. “Covid-19-related stimulus spending, mainly in the form of discretionary handouts to households in major economies, along with pent-up demand fueling consumer spending, pushed inflation up in both advanced and emerging economies,” the report showed. “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,” it added.
The report also cautioned that India does need to be wary of imported inflation especially from elevated global energy prices.