Retail inflation has come down to a 5 year 7 month low. It was 3.34% in March. Earlier, inflation was at 3.28% in August 2019.
A month before March, i.e. in February, inflation was at 3.61%. The Ministry of Statistics released inflation figures today, i.e. on Tuesday, 15 April.
Food items contribute about 50% to the inflation basket. Its inflation has come down from 3.75% to 2.67% on a month-on-month basis. At the same time, rural inflation has come down from 3.79% to 3.25% and urban inflation has increased from 3.32% to 3.43%.
Retail inflation in February:
Inflation had come down to a 7-month low of 3.61% in February.
Food inflation had come down from 5.97% to 3.75% on a month-on-month basis.
Rural inflation had come down from 4.59% to 3.79% and urban from 3.87% to 3.32%.
How does inflation rise and fall?
The rise and fall of inflation depends on the demand and supply of the product. If people have more money, they will buy more things. Buying more things will increase the demand for things and if the supply is not according to the demand, the price of these things will increase.
In this way the market comes under the grip of inflation. In simple words, excessive flow of money or shortage of things in the market causes inflation. On the other hand, if the demand is less and the supply is more, then inflation will be less.
Inflation is determined by CPI
As a customer, you and I buy goods from the retail market. The Consumer Price Index i.e. CPI does the work of showing the change in prices related to this. CPI measures the average price we pay for goods and services.
Apart from crude oil, commodity prices, manufactured cost, there are many other things that play an important role in determining the retail inflation rate. There are about 300 goods on the basis of whose prices the retail inflation rate is decided.
