Context: Rising non-discretionary spending among the consumers, during the pandemic, explains the gap between inflation statistics and the actual rise in prices.
Gaps in inflation statistics: Re-estimation based on CPI headline (using the Paasche index), the April and May inflation numbers on an average were 120 basis points (bps) lower than National Statistical Office (NSO).
Reasons for such gaps: Behavioural Changes of Economic Agents and Implications -
Way Forward: Logical corollary of change in behavioural patterns is to incentivize usage of digital payment through following innovative ways: