The National Statistics Office (NSO) in its CPI press release, provided index numbers for select sub-groups whereas headline inflation numbers were not declared owing to nationwide lockdown hindering the process of data collection. The data collection activities have been suspended with effect from 19th Mar’20. The inflation data for only such commodities or services sub-groups was declared for which adequate trade data was available. The headline CPI based inflation for Mar’20 was revised downwards from 5.91%, declared earlier, to 5.84%.
The groups or sub-groups of CPI for which data compilation have been possible are Food & Beverages, Housing and Health (within Miscellaneous group). The CFP inflation for the month of Apr’20 was reported at 10.49% as compared to 8.76% in the preceding month. Within the food basket, majority of the components saw the pace of inflation quickening during the lockdown period. The inflation for Housing segment was reported at 3.94% for the month of Apr’20 as compared to 3.69% during the preceding month.
Given the paucity of data, the core inflation numbers could not be calculated as well.
The latest numbers coming out of the latest CPI press release hold little value in terms of its impact on the policy decisions. In the wake of COVID-19 led economic disruptions, addressing growth concerns would find precedence in monetary as well as fiscal policy decisions as is also visible from the recent actions.
We had discussed in the previous issue that food basket remains the only component that can potentially see some upside. The over stocking by households and supply disruptions owing to lockdown situation could have been the possible reasons pushing-up the prices of food articles. Thus, we believe, it is one of the critical aspects which policy makers need to keep an eye on. The runaway inflation in food articles can have second round effects on inflationary expectations. To keep a lid on inflationary expectations, it would be critical to ensure smooth functioning of supply side logistics.