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Prices and Inflation 185

Tin prices surged by more than 33 per cent in the first quarter, reaching a 10-year high in March
2021. Prices were lifted by buoyant demand for tin solder in consumer electronics, as well as supply
disruptions due to lockdowns in Bolivia, Peru, and Malaysia, voluntary production cuts in Brazil and
Indonesia, and political turmoil in Myanmar (World Bank, 2021a).

International cotton prices have been showing an upward trend since May 2020 and have reached
levels higher than those witnessed in the last ten years. Cotton Index price which stood at $1.40/kg
in April 2020, has sharply risen to $2.79/kg in November 2021, though it has reduced to $2.65/kg in
December 2021. The strengthening of prices of cotton is owing to the improvement in demand for
cotton after COVID-19 related contraction witnessed in 2020 (World Bank, 2021b).

Domestic inflation as measured through WPI of related items have been highly correlated with
growth in the international prices of these commodities. The inflation in domestic aluminium and
copper prices is positively and highly correlated with international prices (Figure 4B).

Figure 4B: International inflation in Aluminium, Copper and WPI
inflation in related items (January 2018-December 2021)

Aluminium Copper
70 Correlation: 0.8 35 Correlation: 0.9
WPI inflation in Aluminium metal (yoy) (per cent) 40 0 WPI inflation in Copper metal/Copper Rings (yoy) (per cent) 20 5 0
30
60
25
50
15
30
10
20
10
-5
-10
0
100
50
100
0
-50
50
Growth in international Aluminium price -10 -50 Growth in international Copper price
(yoy) (per cent) (per cent)

Source: World Bank and OEA, DPIIT

India imports most of its consumption of crude oil. As expected, domestic crude oil prices are
exclusively related to Indian crude basket prices (Figure 4C). WPI inflation in crude petroleum has a

correlation of 0.98 with the YoY growth in price of Indian basket of crude oil.