Page 536 - ES 2020-21_Volume-1-2 [28-01-21]

Prices and Inflation 163

CURRENT TRENDS IN INFLATION
5.2 Headline inflation based on CPI-Combined (CPI-C) was on a downward path from 2014
to 2018. Though a rising trend was observed since 2019, a moderation in inflation is clearly
visible now (Figure 2). The average CPI-C inflation, which was 5.9 per cent in 2014-15, fell
continuously to 3.4 per cent in 2018-19 and recorded 4.8 per cent in 2019-20. It however
increased to 6.6 per cent in 2020-21 (Apr-Dec) before easing to a 15-month low of 4.6 per
cent in December 2020. Within various groups of CPI-C, the increase in inflation in the current
year was mainly driven by rise in food inflation, which increased from 0.1 per cent in 2018-19
to 6.7 per cent in 2019-20 and further to 9.1 per cent in 2020-21 (Apr-Dec), owing to build up
in vegetable prices. However, the swift steps taken by the Government eased food inflation
significantly to 3.4 per cent in December 2020 from a high of 11 per cent in October 2020. CPI
Core (non-food non-fuel) inflation declined from 5.8 per cent in 2018-19 to 4.0 per cent in 2019-
20 and averaged 5.4 per cent in 2020-21 (Apr-Dec) (Table 2). Rise in core inflation in the current
year is mainly on account of miscellaneous group which primarily consists of services. Inflation
in transport & communication, which have maximum weightage in the miscellaneous group,
increased to 9.4 per cent in the current year as compared to 2.4 per cent in 2019-20. Further,
volatility in gold and silver prices also pushed core inflation up. However, at major group level
of CPI-C, significant fall has been observed in housing inflation from 6.7 per cent in 2018-19 to
4.5 per cent in 2019-20 and further to 3.3 per cent in 2020-21 (Apr-Dec).

Figure 2: Trends in CPI-C Headline, Core and Food inflation

Source: NSO.

Table 2: Inflation in selected groups of CPI-C Base 2012 (in per cent)
Description Weights 2018-19 2019-20 2020-21# Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 (P)
All Groups 100 3.4 4.8 6.6 6.7 6.7 7.3 7.6 6.9 4.6
CFPI* 39.06 0.1 6.7 9.1 9.3 9.1 10.7 11.0 9.5 3.4
Food & beverages 45.86 0.7 6.0 8.4 8.5 8.3 9.8 10.1 8.9 3.9
Cereals & products 9.67 2.1 2.8 5.2 6.9 5.9 4.7 3.5 2.5 1.0
Meat & fish 3.61 4.0 9.3 16.3 17.3 16.5 17.5 18.6 17.0 15.2
Egg 0.43 2.3 4.5 13.4 7.7 10.1 15.6 21.7 20.4 16.1