Inflation Dynamics
Cost-Push and Demand-Pull Factors
Inflation can arise from demand-pull factors (excess demand in the economy) or cost-push factors (rising input costs pushing up prices). In India, food inflation is predominantly supply-driven (monsoon, storage, logistics), while manufactured goods inflation reflects global commodity prices, exchange rate movements, and domestic input costs.
- Cost-push inflation: Rising raw material prices, energy costs, and supply chain disruptions
- Demand-pull inflation: Excess money supply, government spending, credit expansion
- India's WPI inflation had been in negative territory (deflation) for much of 2023, before turning positive in mid-2024
- Global commodity prices (crude oil, metals) significantly influence India's WPI through the fuel and manufactured products categories
- Administered pricing of certain commodities (fertilizers, LPG) can mask true cost pressures
- The Phillips Curve relationship (unemployment-inflation trade-off) has limited applicability in India due to structural factors
● Tracked since February 16, 2026 · last seen May 05, 2026 · updates as the daily brief publishes
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