Economist

Richard Iley

Macroeconomics

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<p><strong>Think Indian inflation dynamics and one word above all should spring to mind: pulses! These legumes might only account for 2.4% of the CPI basket but their proclivity for boom-bust, super-cycles means that pulses are, more often than not, THE key swing factor behind CPI developments. </strong></p>
<p><strong>Much of the explanation can be found in the classic 'cobweb' model of agricultural prices where a temporary weather-induced supply shock drives up prices, which then spurs increased cultivation which then produces a</strong>…</p>
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Think Indian inflation dynamics and one word above all should spring to mind: pulses! These legumes might only account for 2.4% of the CPI basket but their proclivity for boom-bust, super-cycles means that pulses are, more often than not, THE key swing factor behind CPI developments. 
Much of the explanation can be found in the classic 'cobweb' model of agricultural prices where a temporary weather-induced supply shock drives up prices, which then spurs increased cultivation which then produces a…


Chart of the Day: Taking The Pulse