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    Question

    Consider the following statements regarding Economic

    survey 2022-23: 1)    In FY23, retail inflation was mainly driven by higher food inflation, while core inflation stayed at a moderate level. 2)    Food & Beverages’, ‘Clothing & Footwear’, and ‘Fuel & Light’ were the least contributors to headline inflation. 3)    The Russia Ukraine crisis has not made much of an effect on headline inflation. Which of the statements given above is/are correct?
    A 1 only Correct Answer Incorrect Answer
    B 2 only Correct Answer Incorrect Answer
    C 3 only Correct Answer Incorrect Answer
    D 1 and 2 only Correct Answer Incorrect Answer
    E 1, 2 and 3 Correct Answer Incorrect Answer

    Solution

    Headline Inflation Declined from its Peak: FY22 witnessed lower CPI-Combined (CPI-C) based retail inflation as compared to FY21. During FY22, some sub-groups such as ‘oils & fats’, ‘fuel & light’ and ‘transport & communication’ reported high inflation. This was mainly driven by supply disruptions caused by pandemic-induced lockdowns. FY23, began with the Russia-Ukraine crisis that led to high headline inflation rate in April 2022. In FY23, retail inflation was mainly driven by higher food inflation, while core inflation stayed at a moderate level. Hence, statement 3 is incorrect. Retail Inflation Driven by Food Commodities: Retail price inflation mainly stems from the agriculture and allied sector, housing, textiles, and pharmaceutical sectors. Hence, statement 1 is correct. During FY23, ‘food & beverages’, ‘clothing & footwear’, and ‘fuel & light’ were the major contributors to headline inflation– the first two contributing more this fiscal than in the previous one. Hence, statement 2 is not correct. Within the ‘miscellaneous’ group, high inflation was observed in subgroups ‘household goods and services’ and ‘personal care and effects’ owing to the revival of consumer demand in the post-Covid-19 period.

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