What do you understand by the term quot Skewflation quot ........

Indian Economy (Easy) Inflation

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What do you understand by the term "Skewflation"?

It is a situation in which the inflation rate is high and the economic growth rate is stagnated.

It is a situation in which price levels of a few goods increase at a faster rate compared to others.

It is inflation caused by the changes in monetary policy.

It refers to a price rise caused by the fiscal stimulus.

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Explanation:

Skewflation means the skewness of inflation among different sectors of the economy - some goods and services are facing huge inflation, some none and some deflation. Hence option b is the correct answer.
• In India, food prices rose steadily during the last months of 2009 and the early months of 2010, even though the prices of non-food items continued to be relatively stable. As this somewhat unusual phenomenon stubbornly persisted, and policymakers conferred on how to bring it to an end, the term ‘skewflation’ made an appearance in the Economic Survey 2009-10, Government of India, Ministry of Finance.
• Given that it is sector-specific, it is not evident that it calls for monetary or fiscal policy action. On the other hand, given its sustained nature, it is not possible for the government to ignore it since causes stress to consumers.