Main Idea Based Questions - 4 | English for CLAT PDF Download

Directions: Read the passage carefully and answer the question that follow.
Retail inflation, or the inflation rate for consumers, eased to a four-month low of 4.87 per cent in October even as food inflation remained broadly static at 6.6 per cent, data released by the National Statistical Office (NSO) on Monday showed. Though this marked the third month of a moderation in inflation, with the latest print, the retail inflation rate has now completed four years of remaining above 4 per cent in the 4+/- 2 per cent band of Reserve Bank of India’s (RBI) medium-term inflation target.
Food prices are still being seen as a risk to retail inflation. Consumer Food Price Index (CFPI) recorded an inflation rate of 6.61 per cent in October as against 6.62 per cent in September, which was revised up from 6.56 per cent. It had stood at 7.01 per cent in October 2022.
Cereals inflation stood at 10.65 per cent in October, continuing to be in double digits for the second month in a row. There is a growing trend of inflation in egg, fruits, pulses and products, which recorded inflation rates of 9.30 per cent, 9.34 per cent and 18.79 per cent, respectively, in October as against 6.42 per cent, 7.30 per cent and 16.38 per cent in September. Vegetables inflation, however, provided relief by easing to 2.7 per cent in October from 3.39 per cent in September. The decline in retail inflation rate in October was mainly driven by non-food items. Core inflation — non-food, non-fuel segment — eased marginally to 4.4 per cent in October from 4.6 per cent, reflecting weakening of demand, economists said.
Fuel and light group recorded deflation of 0.39 per cent in October as against deflation of 0.11 per cent in September, reflecting the impact of the cut in cooking gas prices and no change in pump prices of diesel and petrol. Miscellaneous inflation, representing services mainly, also moderated to 4.40 per cent in October from 4.77 per cent in the previous month. The overall retail inflation rate in October was higher at 5.12 per cent in rural areas than 4.62 per cent in urban areas. Food inflation for rural areas was 6.58 per cent in October, lower than 6.63 per cent in urban areas. Going ahead, weak prospects for Kharif harvest and Rabi sowing are expected to impact food prices along with a low base effect which will also push up inflation rate in November.
“Going forward, below par monsoon rainfall is likely to have its impact on cereals inflation, this along with pulses inflation is expected to keep food inflation elevated. Food inflation has potential to push retail inflation higher as witnessed in July and August 2023,” Devendra Kumar Pant, Chief Economist & Senior Director – Public Finance, India Ratings and Research said.
[From an Editorial Published in.. The Indian Express on 14 November 2023 named ‘October retail inflation drops to four-month low of 4.87%’]
Q: What was the primary factor contributing to the decline in retail inflation in October, as reported by the National Statistical Office (NSO)?
(a) Decrease in food inflation 
(b) Decline in fuel and light prices 
(c) Easing of core inflation (non-food, non-fuel segment) 
(d) Reduction in vegetable prices
Ans: (c)
Sol: The decline in retail inflation in October was primarily driven by the easing of core inflation, which pertains to the non-food and non-fuel segment. This is evident from the data released by the NSO, which indicated that core inflation eased marginally to 4.4 per cent in October from 4.6 per cent. This reflects a weakening of demand in these segments, contributing significantly to the overall decrease in retail inflation. While other factors like the decline in fuel and light prices, and reduction in vegetable prices did contribute to the overall inflation landscape, the key factor for the dip in the retail inflation rate was the easing of core inflation. This is in line with the general understanding of inflation dynamics, where core inflation often plays a pivotal role in determining the overall inflation trajectory.