ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Making Sense of Persistently High Inflation in India

The rising prices of two product groups - primary articles and fuel - have been responsible for the build-up in headline inflation between December 2009 and August 2013. The most worrisome aspect is the high inflation in a majority of food articles in the last six years or so despite a favourable domestic food supply situation and low global food prices. Based on the analysis of the food expenditure pattern during 2004-12, this article points out that rising domestic demand pressures have contributed to a surge in the prices of six high-value food commodities - pulses, milk, egg, fish, meat and edible oil. Another possible reason for stubborn food prices is the rising cost of production of food commodities.

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