rise in inflation during covid-19.
essay
Answers
Answer:
Menu
Welcome
login
Home
› Economy Policy
Web Exclusive Under the shadow of Covid-19 pandemic, inflation bites India the hardest
By Abhishek Waghmare | Pune | Last Updated at December 16 2020 17:19 IST
Topics Coronavirus | India inflation
inflation. Photo: Shutterstock
Among the many ways in which Covid-19 has affected the economy, the most tangible outcome, the one that affects each and every person, is the impact on inflation.
Even before the pandemic struck, consumer inflation had crossed the upper tolerance level of six per cent in December 2019. India was in a tight situation with inflation higher than the mandate, but economic growth falling fast to levels of three per cent, a rare low.
But even into the pandemic, when inflation numbers in most countries eased, Indians did not see it going below six per cent, apart from the two months of April and May when the consumer price index was imputed from limited data.
Welcome
login
Home
› Economy Policy
Web Exclusive Under the shadow of Covid-19 pandemic, inflation bites India the hardest
By Abhishek Waghmare | Pune | Last Updated at December 16 2020 17:19 IST
Topics Coronavirus | India inflation
inflation. Photo: Shutterstock
Among the many ways in which Covid-19 has affected the economy, the most tangible outcome, the one that affects each and every person, is the impact on inflation.
Even before the pandemic struck, consumer inflation had crossed the upper tolerance level of six per cent in December 2019. India was in a tight situation with inflation higher than the mandate, but economic growth falling fast to levels of three per cent, a rare low.
But even into the pandemic, when inflation numbers in most countries eased, Indians did not see it going below six per cent, apart from the two months of April and May when the consumer price index was imputed from limited data.
The chart below compares movement in monthly inflation numbers for nine countries including India, a few advanced economies (US, UK, Germany, and Japan), Asian and other emerging markets (China, Vietnam, Brazil, and Mexico).
The intent here is to observe two things: one, the movement in inflation across the pandemic year through the lockdown and relaxation phases, and two, inflation in 2020 vis-a-vis the 2019 average in the respective country. The intent is not to compare inflation in India with that with other countries.
Note that in each chart, the solid line represents monthly consumer inflation in that country in 2020, while the dotted line denotes the average monthly inflation in 2019.
What we observe is that in most countries, the pandemic pulled inflation down for a short period, after which, it firmed up again in varying degrees across the nine countries. Only in Germany and Japan, deflationary conditions have sustained for a longer period, nonetheless meaning low inflation.
India went through a different path. The dip in inflation in the initial months of lockdown (through imputed values) was minor, and the curve mostly appears flat rather than a partial 'V' or a smooth 'U'.
Secondly, for most countries, the dip in inflation was such that inflation touched or went below the last year’s average inflation level. On this aspect, too, the Indian situation was different. In the entire year, Indians faced considerably higher inflation than in the previous year.