Increasing Inflation in India

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Economists pointed out that the major driving factor behind the spike in inflation is the food inflation. CPI food index rose to 5.9 per cent in Jan'23 from 4.2 per cent in Dec'22, on YoY basis. Cereals and product-led food inflation reached 16.1 per cent in January 2023 from 1

As of my knowledge cutoff in 2021, the inflation rate in India has been variable over the years but generally ranged from 4-6% in recent years. Inflation refers to the rate at which the general level of prices for goods and services is rising, leading to a decrease in the purchasing power of money. The primary factors contributing to inflation in India include an increase in demand for goods and services, higher production costs, supply chain disruptions, and government policies.

To combat inflation, the Reserve Bank of India (RBI) often increases interest rates to reduce the amount of money in circulation and reduce demand for goods and services. The government can also take measures such as increasing production and supply of goods and services, implementing price controls, and reducing taxes.

It is important to note that the inflation rate can vary across different regions and sectors in India. The RBI and the government regularly monitor inflation rates to ensure that they remain within the target range and do not negatively impact the overall economy.

The Impact of Inflation is it reduces the purchasing power of households due to an increase in prices. The impact of inflation is felt across different sectors of the economy which are favorable to some and unfavorable to others.