Recent increases in goods and services across India run the risk of stagflation.

The price of food in India has hinted towards the proliferation of this economic phenomenon. For example, the prices of onions have increased by 328%. Additionally, train tickets and airfare have also jumped in price.

The Indian economy has been experiencing a slowdown in growth, with the GDP only growing 4.5% during the third quarter when compared to the GDP a year earlier. Meanwhile the prices of consumer goods have jumped 7.3% in December, when compared to 12 months earlier. The growth in GDP was mainly catalyzed by increased government spending.

Governments are usually known to take measures associated with the central bank that help avoid the feeding of consumer anxiety into rising prices. This is known as core-inflation aligning with headline inflation. However, in India those measures are not put in place which leads to core-inflation aligning with headline inflation.

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Economics, Finance and Investing