Page 400 - ES 2020-21_Volume-1-2 [28-01-21]

State of the Economy 2020-21: A Macro View 27

Source: Data from GSTN curated from public platform Indiapulse@ISB

1.30 High food prices remained a major driver of inflation in 2020. However, inflation in December,
2020 fell back into the RBI’s target range of 4 +/- 2 per cent to reach 4.6 per cent year-on-year
as compared to 6.9 per cent in November (Figure 28). This was driven by a steep fall in food
prices, particularly of vegetables, cereals, and protein products and favourable base effects. After
consistently rising for six months since Q1:2020-21, headline inflation also eased sequentially in
December. However, fuel inflation remained sticky owing to higher crude oil prices. Core inflation
remained elevated on a yearly basis but eased as compared to the previous month.

Figure 28: Inflation

20% Combined CPI WPI Inflation CPI Food Inflation WPI Food Inflation

15%

10%

5%
0%

-5%
Jan/19 Feb/19 Mar/19 Apr/19 May/19 Jun/19 Jul/19 Aug/19 Sep/19 Oct/19 Nov/19 Dec/19 Jan/20 Feb/20 Mar/20 Apr/20 May/20 Jun/20 Jul/20 Aug/20 Sep/20 Oct/20 Nov/20 Dec/20

Source: MOSPI