The Wholesale Price Inflation has increased in India during 2021 – 2022 due to which of the following factors ?
- 1. Sharp increase in international prices of crude oil
- 2. Decrease in economic activity post-Covid
- 3. Disruption of global supply chain
- 4. High freight cost
Select the correct answer using the code given below :
2 and 3 only
1, 3 and 4
1 and 2 only
1 and 4 only
Answer is Right!
Answer is Wrong!
This question was previously asked in
UPSC CDS-2 – 2023
2. **Decrease in economic activity post-Covid**: Incorrect. Economic activity in India was recovering significantly in 2021-2022 from the depths of the pandemic-induced slowdown. Increased economic activity typically contributes to demand-side inflation, though WPI is more cost-driven. A decrease in activity would likely dampen inflation.
3. **Disruption of global supply chain**: Correct. The COVID-19 pandemic caused widespread disruptions in global supply chains, leading to shortages of components and finished goods. This mismatch between supply and demand pushed up input costs for producers, directly contributing to higher WPI.
4. **High freight cost**: Correct. Global shipping and logistics costs increased substantially in 2021-2022 due to supply chain bottlenecks, port congestion, and increased fuel prices. Higher freight costs translate into higher landed costs for imported goods and higher transportation costs for domestic movement, adding to WPI.