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Inflation From Dec’20 Is Higher Than Reported Numbers: SBI Report

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Inflation from Dec 2020 onwards is higher than reported numbers an SBI report has stated.

 

CPI inflation slowed to 4.29% in Apr'21 from 5.52% in Mar'21, primarily due to easing food prices.

"Even as the pandemic rages through India, it is worthwhile to look beyond the headline inflation. In particular, rural core has now jumped to 6.4% in Apr'21 and would rise further in May'21. Increasing health expenditure because of the pandemic is having a meaningful impact in rural areas. Item-wise inflation of Health CPI shows persistent month-on-month increase in inflation of non-institutional medicine, and X-ray, ECG, pathological tests. Even hospital and nursing home charges have increased in Apr'21," the SBI report has stated.

It has also noted that in the current pandemic, headline inflation may not be correct to look at.

"A more important price concept is the relative prices which are not a monetary phenomenon but their movements convey important information about the scarcity of particular goods and services as now like health. For example, overall CPI declined in Apr'21 because of significant decline in food CPI, but when the relative prices of food items is compared to overall CPI the deceleration was not sharp as it was seen in actual food CPI," the report has stated.

 
Inflation From Dec’20 Is Higher Than Reported Numbers: SBI Report

"Similarly, for certain items like fuel and health the increase in relative prices is maximum. Interestingly, the core CPI which was showing a decline of 57 bps increased in relative terms by 18 points. We believe such distortions in relative prices must be looked through now as it could have an important impact on ratcheting up future inflationary expectations," the report has said.

Read more about: cpi inflation
Story first published: Tuesday, May 18, 2021, 11:48 [IST]
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