Directions (81-83): Read the following passage and answer the questions based on the given passage. The inflation devil is back and at the wrong time. The 7.35% rise in consumer price inflation for December is a shocker even to those who were prepared for an elevated level of inflation in

Question

Directions (81-83): Read the following passage and answer the questions based on the given passage. The inflation devil is back and at the wrong time. The 7.35% rise in consumer price inflation for December is a shocker even to those who were prepared for an elevated level of inflation in the backdrop of the rise in prices of food commodities in general, and the astronomical rise in the price of onions, in particular. The disturbing December print has set off fears over whether India is entering a period of slow growth accompanied by high inflation, in other words, stagflation. Such fears have to be weighed against a few facts. First, the headline inflation number is driven mainly by food inflation at 14.12% — it was 10.01% in November and -2.65% in December 2018. While onion was the prime villain pushing up price inflation in vegetables to a huge 60.50% compared to December 2018, prices of other food items such as meat and fish (up 9.57%), milk (up 4.22%), eggs (up 8.79%) and some pulses were also on the upswing. These are largely seasonal rises in prices and are driven mainly by supply-side factors, and the prices will reverse once the supply shortfall is addressed. Second, core inflation, which is the one that should be of concern, has only inched up marginally from 3.5% in November to 3.7% in December. That said, it would be worrisome indeed if core inflation were to shoot up or if food inflation does not cool down in the next couple of months. The sharp jump in the CPI has queued the pitch for the Reserve Bank of India’s monetary policy review in February. The central bank had cut rates in the December policy review in response to fears of inflation and had even revised upwards its inflation projection for the second half of the fiscal to 4.7-5.1%. The December print is ... What is the main reason for the rise in consumer price inflation in December?

Accepted Answer

What is the main reason for the rise in consumer price inflation in December?. The question asks for the reason behind the rise in consumer price inflation, and the passage clearly states that headline inflation was driven mainly by food inflation, especially the sharp rise in onion prices. Other food items also rose, but onions are identified as the prime villain. Therefore, the correct answer is the option asking about the main reason for the rise.

Solution

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