Question

    Consider the following statements regarding economic survey 2022-23:

    1.    Financial Year (FY23) has a reversing trend of rural-urban inflation vis-a-vis FY 22.

    2.    Rural fuel inflation remained lower than its urban counterpart throughout the fiscal year 2022-23.

    3.    Farm input costs affect CPI 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 1 and 2 Correct Answer Incorrect Answer
    D 1 and 3 Correct Answer Incorrect Answer
    E 1, 2 and 3 Correct Answer Incorrect Answer

    Solution

    Rural-Urban Inflation Differential Has Declined: 1.    Rural inflation has remained above its urban counterpart throughout the current fiscal year, reversing the trend seen during the pandemic years. CPI-C based food inflation seems to have cooled down after reaching a high of 8.3% in April 2022 due to a moderation in global food prices and a reduction in farm input costs. Hence, statement 1 is correct. 2.    However, the cooling was more pronounced for urban inflation. 3.    Rural fuel inflation remained lower than its urban counterpart throughout the current fiscal, due to subdued price pressures on traditional fuel items such as firewood and cow dung cakes as opposed to petrol and diesel. Hence, statement 2 is correct.

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