Analyse Indian Inflation Scenario For Last Five Years What Is Inflation?

ANALYSE INDIAN INFLATION SCENARIO FOR LAST FIVE YEARS
WHAT IS INFLATION?
In economics, inflation is a sustained increase in the general price level of goods and services in

an economy over a period of time. When the general price level rises, each unit of currency buys
fewer goods and services; consequently, inflation reflects a reduction in the purchasing
power per unit of money – a loss of real value in the medium of exchange and unit of account
within the economy. The opposite of inflation is deflation, a sustained decrease in the general
price level of goods and services. The common measure of inflation is the inflation rate, the
annualized percentage change in a general price index, usually the consumer price index, over
time.
Economists generally believe that very high rates of inflation and hyperinflation are caused by an
excessive growth of the money supply. Views on which factors determine low to moderate rates
of inflation are more varied. Low or moderate inflation may be attributed to fluctuations
in real demand for goods and services, or changes in available supplies such as
during scarcities.]However, the consensus view is that a long sustained period of inflation is
caused by money supply growing faster than the rate of economic growth.
Inflation affects economies in various positive and negative ways. The negative effects of
inflation include an increase in the opportunity cost of holding money, uncertainty over future
inflation which may discourage investment and savings, and if inflation were rapid enough,
shortages of goods as consumers begin hoarding out of concern that prices will increase in the
future. Positive effects include reducing unemployment due to nominal wage rigidity, allowing
the central bank more leeway in carrying out monetary policy, encouraging loans and investment
stead of money hoarding, and avoiding the inefficiencies associated with deflation.
Today, most economists favor a low and steady rate of inflation. Low (as opposed to zero
or negative) inflation reduces the severity of economic recessions by enabling the labor market to
adjust more quickly in a downturn, and reduces the risk that a liquidity trap prevents monetary
policy from stabilizing the economy.
S.R.LUTHRA INSTITUTE OF MANAGEMENT Page 1

HOW IS INFLATION RATE CALCULATED?

What Is the Consumer Price Index – CPI?
The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a
basket of consumer goods and services, such as transportation, food, and medical care. It is
calculated by taking price changes for each item in the predetermined basket of goods and
averaging them. Changes in the CPI are used to assess price changes associated with the cost of
living; the CPI is one of the most frequently used statistics for identifying periods of inflation or
deflation.
Calculating CPI
The BLS records about 80,000 items each month by calling or visiting retail stores, service
establishments (such as cable providers, airlines, car and truck rental agencies), rental units and
doctors’ offices across the country in order to get the best outlook for the CPI.
The formula used to calculate the Consumer Price Index for a single item is as follows:
CPI= Cost of Market Basket in Given Year ×100

Cost of Market Basket in Base Year
How the CPI Is Used

CPI is widely used as an economic indicator. It is the most widely used measure of inflation and,
by proxy, of the effectiveness of the government’s economic policy. The CPI gives the
government, businesses, and citizens an idea about prices changes in the economy, and can act as
a guide in order to make informed decisions about the economy.
The CPI and the components that make it up can also be used as a deflator for other economic
factors, including retail sales, hourly/weekly earnings and the value of a consumer’s dollar to
find its purchasing power. In this case, the dollar’s purchasing power declines when prices
increase.

INFLATION RATE FROM 2014 TO 2018 ( % )
MONTH 2014 2015 2016 2017 2018

JANUARY 7.24 7.17 5.91 1.86 5.11
FEBRUARY 6.73 6.3 5.53 2.62 4.74
MARCH 6.7 6.28 5.51 2.61 4.36
APRIL 7.08 5.79 5.86 2.21 3.97
MAY 7.02 5.74 6.59 1.09 3.96

JUNE 6.49 6.1 6.13 1.08 3.93

JULY 7.23 4.37 6.46 1.79 5.61
AUGUST 6.75 4.35 5.3 2.52 5.61
SEPTEMBER 6.3 5.14 4.14 2.89 5.61
OCTOBER 4.98 6.32 3.35 3.24 5.23
NOVEMBER 4.12 6.72 2.59 3.97 4.86
DECEMBER 5.86 6.32 2.23 4 5.24
ANALYSIS OF JANUARY TO DECEMBER 2014

MONTH 2014(%)
JANUARY 7.24
FEBRUARY 6.73
MARCH 6.7
APRIL 7.08
MAY 7.02
JUNE 6.49
JULY 7.23

AUGUST 6.75
SEPTEMBER 6.3
OCTOBER 4.98
NOVEMBER 4.12
DECEMBER 5.86
Inflation rate in India was 5.86 % in 2014. As seen in above graph only in month of October and
November the inflation rates are majorly changing as compared to other months due to reduction
in price of fuels and food articles. In the month of April and May no major change is being seen.
MONTH 2015(%)
JANUARY 7.17
FEBRUARY 6.3
MARCH 6.28
APRIL 5.79
MAY 5.74
JUNE 6.1

JULY 4.37
AUGUST 4.35
SEPTEMBER 5.14
OCTOBER 6.32
NOVEMBER 6.72
Inflation rate in India was 6.32 % in 2015. As seen in above graph only in month of July and
August the inflation rates are majorly changing as compared to other months due to reduction in
manufacturing products ( sugar mills) . In the month of January inflation rate is comparatively
high between other months.
MONTH 2016(%)
JANUARY 5.91
FEBRUARY 5.53
MARCH 5.51
APRIL 5.86
MAY 6.59
JUNE 6.13
JULY 6.46
AUGUST 5.3
SEPTEMBER 4.14

OCTOBER 3.35
NOVEMBER 2.59
DECEMBER 2.23
Inflation rate in India was 2.23 % in 2016. As seen in above graph only in month of November
and December the inflation rates are less compared to other months due to demonetization. There
was increase in minimum support prices for all rabi crops.

MONTH 2017(%)
JANUARY 1.86
FEBRUARY 2.62
MARCH 2.61
APRIL 2.21
MAY 1.09
JUNE 1.08
JULY 1.79
AUGUST 2.52
SEPTEMBER 2.89
OCTOBER 3.24
NOVEMBER 3.97

DECEMBER 4
3.5
2.5
1.5
0.5
Inflation rate in India was 4.00 % in 2017. This year faced a problem of recession. As seen in
above graph effect of demonetization and GST implementation in July 2017 continued and this
year faced a problem of recession.

MONTH 2018(%)
JANUARY 5.11
FEBRUARY 4.74
MARCH 4.36
Inflation rate in India was 5.24 % in 2018. As seen in
APRIL 3.97
above graph in month of June decrease in prices of
MAY 3.96
meat, fish and milk and other products and also there
JUNE 3.93
was increase in fuel and light prices. There is no change
JULY 5.61 in July , August and September.
AUGUST 5.61
SEPTEMBER 5.61
OCTOBER 5.23
NOVEMBER 4.86
DECEMBER 5.24
QUARTERLY ANALYSIS OF INFLATION RATE 2014
QUARTER 1: JANUARY TO APRIL 2014
MONTH 2014
JANUAR
Y 7.24
FEBRUA
RY 6.73
MARCH 6.7
APRIL 7.08
7.3
7.2
7.1
6.9
6.8
6.7
6.6
6.5
6.4
JANUARY FEBRUARY MARCH APRIL
During the first quarter of 2014 inflation stood at 5.8% as mainly due to food and fuel prices
were high. The main factors affecting inflation were decline in crude prices and softness in
global prices of tradables particularly edible oils and coal.

QUARTER 2 : MAY TO AUGUST 2014
MONT
H 2014
MAY 7.02
JUNE 6.49
JULY 7.23
AUGUS
T 6.75
7.4
7.2
6.8
6.6
6.4
6.2
6
MAY JUNE JULY AUGUST
In second quarter inflation declined to 3.9% due to decrease in vegetables prices and moderation
in prices of cereals and eggs, meat and fish. Also due to impose of minimum export price for
potatoes and onions there was a change in inflation rates.

QUARTER 3: SEPTEMBER TO DECEMBER 2014
MONTH 2014
SEPTEMBE
R 6.3
OCTOBER 4.98
NOVEMBE
R 4.12
DECEMBE
R 5.86
0
SEPTEMBER OCTOBER NOVEMBER DECEMBER
During third quarter of 2014 the inflation declined due to seasonal softening of food and
vegetables prices after the late arrival of monsoon exerted some pressure on vegetables prices.
Inflation in the fuel and light group registered a consistent decline. Also there was a sharp
decline in international crude oil prices.

QUARTERLY ANALYSIS OF INFLATION RATE OF 2015
MONTH 2015
JANUAR
Y 7.17
FEBRUA
RY 6.3
MARCH 6.28
APRIL 5.79
0
Inflation in fuel and power segment was negative in January, also

the rate of decline in diesel prices was higher. The rate of inflation
in LPG, petrol and high speed diesel was declining.

QUARTER 2: MAY TO AUGUST 2015

MONT
H 2015
MAY 5.74
JUNE 6.1
JULY 4.37
AUGUS
T 4.35
0
There was a growth in the industrial sector in the month of May and June with a rise in price of
food items. The contraction can be attributed largely to falling food and commodity prices in the
month of July and August.

MONTH 2015
SEPTEMBE
R 5.14
OCTOBER 6.32
NOVEMBE
R 6.72
DECEMBE
R 6.32
0

Overall inflation in third quarter of 2015 remained moderate. During the quarter, the rate of retail
inflation also increased a little upto 5%. The country’s industrial production for the quarter
contracted as compared to other quarter. Also there was increase in prices of fruits.
MONTH 2016
JANUAR
Y 5.91
FEBRUA
RY 5.53
MARCH 5.51
APRIL 5.86

5.9
5.8
5.7
5.6
5.5
5.4
5.3
The inflation rate in first quarter of 2016 is not majorly changing. As seen in above graph no
changes are there in the inflation rates.
MONT
H 2016
MAY 6.59
JUNE 6.13
JULY 6.46
AUGUS
T 5.3

0
Higher prices for vegetables, housing, and property rates were partly countered by lower prices
for petrol, vehicle relicensing fees, and fruit. Tradables showed no overall change and non-
tradables rose 0.5 percent. This led to increase in inflation in second quarter of 2016.
MONTH 2016
SEPTEMBE
R 4.14
OCTOBER 3.35
NOVEMBE
R 2.59
DECEMBE
R 2.23

4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
The inflation rose upto 0.3%. Housing-related prices rose, with purchase of new housing,
excluding land up 2.0 percent. Vegetable prices rose 16 percent (up 0.5 percent after seasonal
adjustment). Transport prices fell 1.9 percent, influenced by lower vehicle relicensing fees.
MONTH 2017
JANUAR
Y 1.86
FEBRUA
RY 2.62
MARCH 2.61
APRIL 2.21

2.5
1.5
0.5
0
There was a moderate increase in prices, resulting in a low level of inflation of 2.2 per cent in
quarter one and no major changes were seen.
MONTH 2017 QUARTER 2: MAY TO AUGUST 2017

MAY 1.09
JUNE 1.08
JULY 1.79
AUGUS
T 2.52

2.5
1.5
0.5
0
There was a moderate increase in prices resulting in a low level of inflation of 3.0 per cent in
quarter two. Also due to GST implementation the inflation rates were declining.
MONTH 2017 QUARTER 3: SEPTEMBER TO DECEMBER 2017

SEPTEMBER 2.89
OCTOBER 3.24
NOVEMBER 3.97
DECEMBER 4

3.5
2.5
1.5
0.5
0
Effect of demonetization and GST implementation continued and led to continuous fall in
inflation rates and hence 2017 was a period of recession.
MONTH 2018
JANUAR 5.11

Y
FEBRUA
RY 4.74
MARCH 4.36
APRIL 3.97
0
As the effect of GST implementation continued, inflation in first quarter of 2018 was decreasing
and mainly in the sectors of fuel and power. Also the inflation for non food manufactured
products ( core ) increased.
MONT
H 2018
MAY 3.96
JUNE 3.93

JULY 5.61
AUGUS
T 5.61
0
Inflation in second quarter of 2018 increased for fuel and light. Also there was a increase in
prices of cereals, products, oils, fats, fruits and vegetables. Due to this there was a increase in
inflation.
MONTH 2018
SEPTEMBE
R 5.61
OCTOBER 5.23
NOVEMBE
R 4.86

DECEMBE
R 5.24
5.8
5.6
5.4
5.2
4.8
4.6
4.4
Inflation declined in the third quarter of 2018. There was a decline in food prices, fuel and coal
and non manufacturing products.

OVERALL COMPARISION BETWEEN

2014 TO 2018
8
5
2014
2015
4
2016
2017
3 2018
0
0 2 4 6 8 10 12 14
Inflation rate in India was 5.86% in 2014. That is 3.27 less than it

was in the preceding 2013 (9.13 %) and 0.47% less than in the
following year of 2015.
Inflation rate in India was 6.32% in 2015. That is 0.47 more than it

was in the preceding 2014 and 4.09% more than in the following
year of 2016.
Inflation rate in India was 2.23% in 2016. That is 4.09 less than it

was in the preceding 2015 and 1.77% less than in the following
year of 2017.
Inflation rate in India was 4.00% in 2017. That is 1.77 more than it

was in the preceding 2016 and 1.24% less than in the following
year of 2018.

Monthly inflation rate in India was -0.33% in December 2018. That

is 0.33 less than it was in November 2018 and 0.36 more than in
December 2017. At the same time, 2018 year to date inflation
rate is 5.24% and year over year inflation rate is 5.24%.
BIBLIOGRAPHY:
https://en.wikipedia.org/wiki/Inflation
https://www.statbureau.org/en/india/inflation/2014
https://dea.gov.in/monthly-economic-report-table

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ANALYSE INDIAN INFLATION SCENARIO FOR LAST FIVE YEARS

In economics, inflation is a sustained increase in the general price level of goods and services in

S.R.LUTHRA INSTITUTE OF MANAGEMENT Page 1

HOW IS INFLATION RATE CALCULATED?

CPI= Cost of Market Basket in Given Year ×100

How the CPI Is Used

S.R.LUTHRA INSTITUTE OF MANAGEMENT Page 2

INFLATION RATE FROM 2014 TO 2018 ( % )

MONTH 2014 2015 2016 2017 2018

S.R.LUTHRA INSTITUTE OF MANAGEMENT Page 3

JUNE 6.49 6.1 6.13 1.08 3.93

ANALYSIS OF JANUARY TO DECEMBER 2014

S.R.LUTHRA INSTITUTE OF MANAGEMENT Page 4

ANALYSIS OF JANUARY TO DECEMBER 2015

S.R.LUTHRA INSTITUTE OF MANAGEMENT Page 5

ANALYSIS OF JANUARY TO DECEMBER 2016

S.R.LUTHRA INSTITUTE OF MANAGEMENT Page 6

ANALYSIS OF JANUARY TO DECEMBER 2017

S.R.LUTHRA INSTITUTE OF MANAGEMENT Page 7

ANALYSIS OF JANUARY TO DECEMBER 2018

QUARTERLY ANALYSIS OF INFLATION RATE 2014

QUARTER 1: JANUARY TO APRIL 2014

S.R.LUTHRA INSTITUTE OF MANAGEMENT Page 9

QUARTER 2 : MAY TO AUGUST 2014

S.R.LUTHRA INSTITUTE OF MANAGEMENT Page 10

QUARTER 3: SEPTEMBER TO DECEMBER 2014

S.R.LUTHRA INSTITUTE OF MANAGEMENT Page 11

QUARTERLY ANALYSIS OF INFLATION RATE OF 2015

QUARTER 1: JANUARY TO APRIL 2015

Inflation in fuel and power segment was negative in January, also

S.R.LUTHRA INSTITUTE OF MANAGEMENT Page 12

QUARTER 2: MAY TO AUGUST 2015

S.R.LUTHRA INSTITUTE OF MANAGEMENT Page 13

QUARTER 3: SEPTEMBER TO DECEMBER 2015

S.R.LUTHRA INSTITUTE OF MANAGEMENT Page 14

QUARTERLY ANALYSIS OF INFLATION RATE OF 2016

QUARTER 1: JANUARY TO APRIL 2016

S.R.LUTHRA INSTITUTE OF MANAGEMENT Page 15

QUARTER 2: MAY TO AUGUST 2016

S.R.LUTHRA INSTITUTE OF MANAGEMENT Page 16

QUARTER 3: SEPTEMBER TO DECEMBER 2016

S.R.LUTHRA INSTITUTE OF MANAGEMENT Page 17

QUARTERLY ANALYSIS OF INFLATION RATE OF 2017

QUARTER 1: JANUARY TO APRIL 2017

S.R.LUTHRA INSTITUTE OF MANAGEMENT Page 18

MONTH 2017 QUARTER 2: MAY TO AUGUST 2017

S.R.LUTHRA INSTITUTE OF MANAGEMENT Page 19

MONTH 2017 QUARTER 3: SEPTEMBER TO DECEMBER 2017

S.R.LUTHRA INSTITUTE OF MANAGEMENT Page 20

QUARTERLY ANALYSIS OF INFLATION RATE OF 2018

QUARTER 1: JANUARY TO APRIL 2018

S.R.LUTHRA INSTITUTE OF MANAGEMENT Page 21

QUARTER 2: MAY TO AUGUST 2018

S.R.LUTHRA INSTITUTE OF MANAGEMENT Page 22

QUARTER 3: SEPTEMBER TO DECEMBER 2018

S.R.LUTHRA INSTITUTE OF MANAGEMENT Page 23

S.R.LUTHRA INSTITUTE OF MANAGEMENT Page 24

OVERALL COMPARISION BETWEEN

Inflation rate in India was 5.86% in 2014. That is 3.27 less than it

Inflation rate in India was 6.32% in 2015. That is 0.47 more than it

Inflation rate in India was 2.23% in 2016. That is 4.09 less than it

Inflation rate in India was 4.00% in 2017. That is 1.77 more than it