"The Indian inflation situation is very confusing right now. Inflation measurement is tricky, expectations are volatile, and the forecasts fragile. It is not clear why inflation is sticky despite the first recession in more than four decades. Inflation had collapsed even during the far less brutal downturn after the effects of the North Atlantic financial crisis hit Indian shores in 2008. The answer to that lies in the big analytical question: Is India facing a supply shock or a demand shock right now?"
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