In this article for Mint, Niranjan Rajadhyaksha discusses the case of Indian inflation—what explains its sharp spike when the pandemic struck and why in an economy expected to contract, it continues to be high. Excerpts below:
"There is one important difference, however. No other major economy saw a sharp spike in inflation for April. Indian inflation shot up from 5.8% in March to 7.2% in April. Even countries such as Argentina, Turkey and Pakistan, which have higher inflation than India, reported lower price increases in April compared to March.
Why did India see a sharp increase in inflation after the pandemic struck? Three possible explanations come to mind. First, India had one of the most severe lockdowns in the world, so the disruption in its supply chains was worse than in other major economies."
Read the full article here.