Context:
India’s Retail Inflation eases to Six-year low in April 2025
Key Findings:
- Headline Inflation Decline: April 2025 saw an 18 basis points drop in headline inflation compared to March 2025.
- Lowest Inflation Since 2019: The All India Consumer Price Index (CPI) – Combined recorded 3.16% year-on-year inflation, the lowest since July 2019.
- CPI – Measures the average price change consumers face for a predefined basket of goods and services.
- Composition – Comprises both urban and rural CPI.
- Compiled by – National Statistical Office (NSO), under the Ministry of Statistics and Programme Implementation (MoSPI)
- Base Year: CPI calculations currently use 2012 as the base year.
- Core Inflation: Rose slightly to 4.1%, still within the Reserve Bank of India’s (RBI) target range.
Reasons for Declining Inflation:
- Easing Food Prices: A significant drop in prices, particularly in vegetables and pulses.
- Reduction in Non-Food Item Prices:
- Inflation decline in housing.
- Lower inflation in pan, tobacco, and intoxicants categories.
- Rural Inflation Drop:
- Headline inflation in rural areas decreased to 2.92% (compared to 3.25% in March).
- Food inflation in rural regions also showed a notable decline.
Key Terms:
- Inflation: The rate at which prices increase over a given period, affecting overall cost of living.
- Headline Inflation: Represents price changes across a broad category of goods and services, as reflected in the CPI (including fuel, housing, food, beverages, etc.).
- Core Inflation: Excludes food and fuel prices, as these are more volatile and subject to frequent fluctuations.
Source: TH
Previous Year Question
Despite being a high saving economy, capital formation may not result in significant increase in output due to
[UPSC Civil Services Exam – 2023 Prelims]
(a) weak administrative machinery
(b) illiteracy
(c) high population density
(d) high capital-output ratio
Answer: (d)