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Prices and Inflation 165

Figure 5: Contribution of groups to overall CPI-C inflation in 2020-21
(April-December) and 2021-22 (April-December) in per cent

70 45.9
60
50 28.3
per cent 40
30
20 6.5 10.1 6.8
10 2.4
0
Food & beverages Pan, tobacco & intoxicants Clothing & footwear Housing Fuel and light Miscellaneous

2020-21 (Apr-Dec) 2021-22 (Apr-Dec) Weights

Source: NSO, MoSPI
5.10 ‘Fuel and light’ and ‘Transport and communication’: In 2021-22 (April-December),
inflation in ‘fuel and light’ and ‘transport and communication’ was mostly driven by high
international crude oil, petroleum product prices, and higher taxes (Figure 6). In April 2020,
in response to subdued global demand because of COVID-19 induced restrictions, the price
of Indian basket of crude oil dipped to $19.9/bbl. However, thereafter, the prices have been
on an uptrend (Figure 7). The upward trend was on account of unprecedented cuts in crude oil
supply by OPEC and other oil producing countries. The upward trend continued in 2021 as
well, as demand picked up with easing of COVID-19 restriction in most regions of the world.
Besides, the unwinding of production cuts made last year by OPEC+ countries has been gradual
and has not kept pace with the recovery in demand. However, since second half of October
2021 crude oil prices had softened, due to factors including rising COVID-19 cases in Europe,
and possibility of release of crude oil from strategic reserves by the USA and other countries.
Further, cut in central excise duty on petrol and diesel followed by reduction in VAT by majority
of the State Governments, led to moderation of retail selling price of petrol and diesel in India in
2021 (Figure 8). However, crude oil price again witnessed an uptick in January 2022 with tight
supply amid concerns about rising geopolitical uncertainties in Eastern Europe and the Middle
East.