Managing inflation has been a herculean task globally during the ongoing Covid-19 pandemic. Global value chains are more connected than ever, and the change in prices of goods and services in one country has an impact in several parts of the world. Countries employ various tools ranging from monetary policy to fiscal spending to rein in inflation, which has a direct impact on the lives, livelihoods, and living standards of their populations. India was reeling under rising inflation even before the pandemic began, with food and fuel inflation being the major drivers of price rise. Pandemic-induced lockdowns have further impacted economic activity negatively. Lower economic activity coupled with supply chain bottlenecks, domestically and internationally, have restricted the government’s ability to deal with inflation as physical and financial resources are diverted towards managing the Covid-19 situation. With this article, we hope to shed light on the constant rise in inflation during the various waves of the Covid-19 pandemic in India, the impact this has on individuals and businesses, as well as the measures being taken by the Government of India and the Reserve Bank of India (RBI) to control the same.
Onions have been at the receiving end of rising inflation for years now.
Photograph by Wikimedia Commons