Inflation in India: UPSC Economy Guide
A clear framework for causes, measurement, distributional effects and policy trade-offs.
Meaning and measurement
Inflation is a sustained rise in the general price level, which reduces purchasing power. Consumer Price Index measures household-facing price change, while other indices can illuminate producer or wholesale price movements. Always specify the measure before interpreting a number.
Causes are not identical
Demand pressures, supply disruptions, imported fuel or food costs, exchange-rate movement and expectations can all contribute. Food inflation affects households unevenly, so the policy response may combine monetary policy with supply management, logistics and targeted support.
Mains answer structure
Define the issue, classify the causes, identify who bears the cost, and explain the trade-off between price stability and growth. Avoid claiming that one instrument can solve every type of inflation.
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