Page 56 - economic_survey_2021-2022

30 Economic Survey 2021-22

Inflation
1.37 Inflation has reappeared as a global issue in both advanced and emerging economies (Figure
33). The surge in energy prices, non-food commodities, input prices, disruption of global supply
chains, and rising freight costs stoked global inflation during the year. In India, Consumer Price
Index (CPI) inflation moderated to 5.2 per cent in 2021-22 (April-December) from 6.6 per cent
in the corresponding period of 2020-21. It was 5.6 per cent (YoY) in December 2021, which is
within the targeted tolerance band (Figure 34). The decline in retail inflation in 2021-22 was
led by easing of food inflation (details in Chapter 5). Wholesale Price Inflation (WPI), however,
has been running in double-digits. The inflation in ‘fuel and power’ group of WPI was above
20 per cent reflecting higher international petroleum prices. Although the high WPI inflation is
partly due to base effects that will even out, India does need to be wary of imported inflation,
especially from elevated global energy prices.

Figure 33: Consumer Price Inflation Rates Figure 34: CPI and WPI Inflation

16%
CPI WPI
8
12%
AEs EMDEs
6 8%
Per cent 4 4%

2 0%
0 -4%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 -8%

Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 Jun-21 Aug-21 Oct-21 Dec-21

Source: World Economic Outlook, January 2022 Update, Source: MoSPI, DPIIT
IMF
Note: Figures are annual averages; Figures for 2021 are
projections. Advanced Economies include 40 economies
and Emerging Markets and Developing Economies
(EMDEs) include 156 economies as per IMF classification

1.38 Overall, macro-economic stability indicators suggest that the Indian economy is well-
placed to take on the challenges of 2022-23.

Box 2: Global Supply-Side Disruption

As the world economy recovered in 2021, it is faced with serious supply-side constraints ranging
from delivery delays, container shortages and semiconductor chip shortages. According to the United
Nations Conference on Trade and Development, “…The COVID-19 pandemic led to a sudden dip in
international seaborne trade. But by late 2020 there had been a swift rebound mainly in a container
and dry bulk shipping. The recovery in container trade flows, which was mainly on East-West
containerized trade lanes, created a series of logistical challenges and hurdles, pushed up rates and
prices, increased delays and dwell times, and undermined service reliability.” As shown by the IHS
1
Markit suppliers’ delivery times index (Figure 2A), delivery times in the US and the European Union
(EU) have hit their worst ever performance since 2010 .
2
1 UNCTAD, Review of Maritime Transport 2021. Pg 57.
2 https://m.rbi.org.in//Scripts/BS_ViewBulletin.aspx?Id=20628