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162 Economic Survey 2021-22

Table 1. General inflation based on different price indices (in per cent)

Indices 2015- 2016- 2017- 2018- 2019- 2020- 2020- 2021
16 17 18 19 20 21 21^ -22*
WPI -3.7 1.7 3.0 4.3 1.7 1.3 0.0 12.5

CPI - C
(Headline 4.9 4.5 3.6 3.4 4.8 6.2 6.6 5.2
Inflation)

CPI – IW # 5.6 4.2 2.9 5.6 7.3 5.2 5.2 5.0
CPI - AL 4.4 4.2 2.2 2.1 8.0 5.5 7.0 3.2
CPI - RL 4.6 4.2 2.3 2.2 7.7 5.5 6.8 3.5

Source: Office of the Economic Adviser, Department for Promotion of Industry, and Internal Trade (DPIIT) for
WPI, National Statistical Office (NSO) for CPI-C and Labour Bureau for CPI-IW, CPI-AL and CPI-RL.
Notes: #CPI-IW inflation for 2020-21 onwards is based on new series 2016=100; (P) - Provisional; C stands
for Combined, IW stands for Industrial Workers, AL stands for Agricultural Labourers and RL stands for Rural
Labourers. *2021-22 (April to December) and CPI-IW, CPI-AL, RL (April to November)
^2020-21 (April to December) and CPI-IW, CPI-AL, RL (April to November)

CURRENT TRENDS IN INFLATION AND ITS DRIVERS

Recent Trends in Retail Inflation

5.4 The average retail inflation which was 4.8 per cent in 2019-20, inched up to 6.2 per cent
in 2020-21, on account of COVID-19 related supply chain disruptions and stalled economic
activity due to lockdown. Since July 2021, retail inflation is well within the tolerance band of
targeted limit of 4 per cent +/- 2 percentage points set by the Government for the period April
1, 2021- March 31, 2026 (Table 2). Average retail inflation in 2021-22 (April-December) has
declined to 5.2 per cent as against 6.6 per cent during April-December 2020-21.

5.5 In 2021-22, the decline in retail inflation was led by easing of food inflation. Food inflation,
as measured by the Consumer Food Price Index (CFPI), averaged at a low of 2.9 per cent in
2021-22 (April to December), as against 9.1 per cent in the corresponding period last year. Food
inflation declined between July and September 2021. Though edging up, it increased to 4.0 per
cent in December 2021.

5.6 During 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 April-December 2021 stood at 5.9 per cent as against
5.4 per cent in corresponding period last year, and remained below 6 per cent during most
months. (Figure 3).