The annual inflation rate in the Euro zone, including large economies of Germany, France, Italy and Spain, all pandemic-hit, was only around 0.4 percent in July as estimated by the Harmonised Index of Consumer Prices (HICP). In the US, the consumer price inflation rate picked up 0.2 per cent to 1.0 per cent year-on-year in July 2020. Energy prices dropped 11.2 per cent as the declines in gasoline and fuel oil cost eased after the lifting of coronavirus-induced restrictions. Food prices rose 0.4 per cent boosted by cost for food away from home. Additional upward pressure came from new vehicles (0.5 per cent vs -0.2 percent), medical care commodities (1.1 per cent vs 1.3 per cent), shelter (2.3 per cent vs 2.4 per cent) and medical care services (5.9 per cent vs 6.0 per cent). However, deflation was recorded in the US for used cars and trucks, apparel and transportation services.

Japan's consumer price inflation stood at an over-three-year low of 0.1 per cent year-on-year in June, as the pandemic continued to hamper consumption. Prices fell a sharp 10.5 per cent for education. They were down for transport and communication, fuel, light & water charges, and other under the miscellaneous group. Inflation for housing edged down to 0.7 per cent and for clothing & footwear to 1.3 per cent. Also, inflation for food declined to 1.5 per cent from 2.1 per cent although medicare costs went up 0.6 per cent. On a monthly basis, consumer prices edged up 0.1 per cent after remaining flat for sometime. Core consumer prices, which exclude fresh food, remained unchanged after dropping 0.2 per cent in the previous month.

According to the Australian Bureau of Statistics (ABS), the country’s CPI fell 1.9 per cent in the June 2020 quarter. Chief ABS economist Bruce Hockman said: "This was the largest quarterly fall in the 72 year history of the CPI.” The annual variation rate of the CPI in the UK in June was 0.6 percent. The monthly variation rate of the index was 0.1 per cent, and thus the accumulated inflation in 2020 is only 0.1. The official index highlighted the increase of 1.7 per cent in the prices of healthcare until its inter-annual rate reached 2.1 per cent. The prices of food items decreased 0.6 per cent.

Of the BRICS countries, generally inflation prone Brazil’s CPI growth was measured at 2.3 per cent YoY in July 2020, compared with a rate of 2.1 percent in the previous month. In Russia, the CPI growth was measured at 3.4 per cent YoY in July, compared with a rate of 3.2 per cent in the previous month. The CPI in China increased only 0.60 percent in July over the previous month. The retail price went up by 2.7 per cent year-on-year, with an increase of 2.4 per cent in urban and 3.7 per cent in rural pockets. Although the prices of food articles went up by 13.2 per cent, those of the non-food items and services remained unchanged. The annual inflation rate in South Africa rose to 2.2 per cent in June 2020 from an over 15-year low of 2.1 per cent in the previous month.

However, it is an altogether different story in India. The latest published official data showed that the retail price inflation rate in July climbed to 6.93 per cent as against the Reserve Bank’s target of containing the rate within four percent. During this month, vegetables, fish and meat prices have hit the roof. The country’s retail inflation spiked in July mainly on account of higher food prices, the data released by the Ministry of Statistics & Programme Implementation (MoSPI) showed. Interestingly, the government did not release the headline retail inflation data in April and May. The government had mandated the Reserve Bank to keep inflation within the range of four per cent with a margin of 2 per cent on either side. The inflation in the food basket surged to 9.62 per cent in July as against 8.72 per cent in June. The prices of pulses went up 15.92 per cent in July on YoY. The fish and meat segment saw a rise of 18.81 percent.

An artificially increased diesel and petrol prices through central and state taxes to partially protect their revenue incomes in the face of sharp economic downturn due to lockdown and other social distancing regulations — causing a near shutdown of a large section of the services industry and encouraging work from home — has substantially raised general transportation cost. Retail prices have also increased due to sudden jump in e-commerce services and home deliveries among the wealthy. Nearly 25 per cent of India’s population, numbering some 300 million or comprising almost 90 percent of the entire population of the US, have been indulging in e-commerce and taking expensive home deliveries of food like never before. The pandemic has not contracted the consumption of India’s fund-flush rich and upper middle-class. Their spendable funds far outstrip the pandemic-hit supplies of consumer goods. This is mainly contributing to the growing retail inflation.

Unfortunately, the price inflation has seriously affected the poor, the lower middle class and tens of millions of those who became jobless due to the pandemic, both inside and outside the country. Together, the latter represent over a billion of India’s population. The inflation rate could have been much higher if the government did not provide free ration — mostly wheat, rice, pulses and, occasionally, potatoes — to a large weaker section of the society. (IPA Service)