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inflation may be peaking

UPSC CURRENT AFFAIRS | INDICATORS SHOW INFLATION MAY BE PEAKING, RBI SAYS | 19TH JULY | ECONOMIC TIMES

/ July, 2022, UPSC Daily Current Affairs

WHY IN THE NEWS?

The Reserve Bank of India in its July bulletin has said that there are indications that inflation may be peaking.

KEY DETAILS ABOUT INFLATION MAY BE PEAKING:

  • Inflation, measured by the consumer price index (CPI), came in at 7.01% in June compared with 7.04% in May and 7.79% in April, still above the MPC’s tolerance band.

WHAT IS INFLATION?

  • Inflation is the rate of increase in prices over a given period of time. Inflation is typically a broad measure, such as the overall increase in prices or the increase in the cost of living in a country.
  • Types of Inflation
  • The different types of inflation in an economy can be explained as follows:
  1. Demand-Pull Inflation

This type of inflation is caused due to an increase in aggregate demand in the economy.

  1. Cost-Push Inflation

This type of inflation is caused due to various reasons such as:

  1. Increase in price of inputs
  2. Hoarding and Speculation of commodities
  3. Defective Supply chain
  4. Increase in indirect taxes
  5. Depreciation of Currency
  6. Crude oil price fluctuation
  7. Defective food supply chain
  8. Low growth of Agricultural sector
  9. Food Inflation
  10. Interest rates increased by RBI

INDICATORS FOR PEAKING UP OF INFLATION:

  • Revival of the monsoon,
  • The pick-up in manufacturing and services,
  • Stabilization of inflation pressures
  • Strong buffers in the form of adequate international reserves,
  • Sufficient food grain stocks
  • A well-capitalized financial system

SOURCE: ECONOMIC TIMES