The period 2008-09 saw significant inflationary pressures in the Indian economy, largely driven by high food prices. Global commodity price rises and domestic supply-side factors led to a sharp increase in the prices of essential food items such as foodgrains, pulses, edible oils, etc. As food items constitute a significant weight in the Consumer Price Index (CPI), this surge in food inflation directly contributed to a sharp increase in the overall CPI.
What was the reason for the sharp increase in Consumer Price Index (CPI) in 2008-09 ?
Asked in MPSC CS Prelims 2012 · Topic: Money & Banking (Inflation: Types, Causes, Effects, and Monetary Policy Responses)
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Answer: C. Sharp increase in the prices of foodgrains like wheat, rice and pulses
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