Dusting off the inflation cap

In early July, the statistics office released the inflation numbers for three months — April, May, and June — all together, following some pandemic-related delays in data processes. Most had assumed inflation to be in the 5-6 per cent range, but it came in higher at 6-7.5 per cent, well above the Re­s­erve Bank of India’s (RBI’s) 4 per cent target.

The popular narrative on inflation is that the rise was because production and distribution had ceased due to the pandemic, leaving too many buyers chasing too few goods. And as the economy gets back on its feet, this supply shock