Inflation in India

1. Trends in India’s inflation rate
1

2. “Inflation poses a serious threat to the growth momentum.
Whatever be the cause, the fact remains that inflation is something
which needs to be tackled with great urgency”.
-Dr. Manmohan Singh, February 4, 2011, New Delhi
In economics, inflation means, a rise in general level of
prices of goods and services in an economy over a period of time.
Inflation has a great effect on the people with limited
income i.e. of the wage earners and salaried people who in easy
language are called common people.
2

3. Year Annual inflation
(dec vs. dec) (%)
Year Annual inflation
(dec vs. dec) (%)
1990 13.71 2003 3.72
1991 13.07 2004 3.78
1992 8.00 2005 5.57
1993 8.64 2006 6.53
1994 9.47 2007 5.51
1995 9.69 2008 9.70
1996 10.41 2009 14.97
1997 6.29 2010 9.47
1998 15.32 2011 6.49
1999 0.47 2012 11.17
2000 3.48 2013 9.13
2001 5.16 2014 5.86
2002 3.20 2015 6.32
Rate of Inflation in India (CPI)
Source: inflation.eu/worldwide inflation data 3

4. 13.71
13.07
8
8.64
9.47 9.69
0.41
6.29
15.32
0.47
3.48
5.16
3.2
3.72
3.78
5.57
6.53
5.51
9.7
14.97
9.47
6.49
11.17
9.13
5.86
6.32
0
2
4
6
8
10
12
14
16
18
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Inflation in India (CPI)Rateofinflation(%)
Year
Source : inflation.eu/worldwide inflation data
4

5. 5
Trends of Inflation in India
First, the period from 1994-95 to 2004-05 shows a consistent
10-year decline in inflation rates, unlike any other time in history. The
declining trend in inflation during 1994-95 to 2004-05 was the result of
structural changes in the macroeconomic framework due to
liberalisation.
Second, although inflation has started increasing after
2004-05, it still is not close to the pre-1994-95 phase.
Currently, we see both increasing rates of average inflation and
instability, but they are still lower than historical trends.

6. 6
Month January February March April May June July
Inflation
rate (%)
5.69 5.26 4.83 5.47 5.76 5.77 6.13
Indian Inflation rate for the year 2016
Source: www.tradingeconomics.com / MOSPI, India
When we compare the current inflation rates to the 1990s,
they seem high but compared with four decades of data, the trends
are not so worrisome. However, the increased instability displayed
by the inflation rates is troubling.

7. 7
5.69
5.26
4.83
5.47
5.76 5.77
6.13
0
1
2
3
4
5
6
7
8
9
10
January February March April May June July
Current rate of inflation in India (2016)Rateofinflation(%)
Month

8. 8
The inflation in India from 1991 till date was mostly due to
the rise in crude oil prices and food prices which made a
tremendous change in the general price level.
With the introduction of reform like Globalization in India,
the economy has been affected to a large extent because of
changes happening in the outside world in both senses good as well
as bad.

9. 9
Ashima Goyal, member of the Technical Advisory Committee
on monetary policy says that inflation will slow from the present level
as food prices are going to come down.
He further adds that despite a poor monsoon in the past two
years, food inflation did not reach high double digits like in the late
2000s.
Goyal also says that the government has taken some steps to
increase the acreage of food items like pulses. Monsoon is good this
year. We could see a fall in food prices going ahead. Thus, Reserve
Bank of India’s 5 per cent inflation target for March 2017 can come to
a reality.

10. 10
Finally, inflation is a sign that an economy is growing. The
lack of inflation may be an indication that the economy is
weakening. So Inflation isn't so bad after all.

11. 11
Thank you
Dr. A. Jeyanthi,
Associate Professor, Department of Economics,
Govindammal Aditanar College for Women, Tiruchendur