Inflation has once again raised its ugly head amidst the Covid-19 pandemic and the ongoing Russia-Ukraine war, which crossed 90 days recently. As a result, India’s Wholesale Price Index (WPI) stands at 15.05 per cent for April 2022 and the Consumer Price Index (CPI) stands at a record 7.8 per cent for the same period. The situation is such that inflation is hovering around 8.3 per cent instead of the targeted two per cent in the United States of America (USA). The high inflation rate all over the world has posed a stiff challenge for the world’s economies and countries need to find a way out by working together. If the current situation prevails for a more extended period it may likely lead to a recession, with reduced trade and industrial activity. It is high time that the United Nations (UN) takes the lead in saving the world from the impending economic crisis as the world today is inter-connected and dependent on each other for the movement of goods and services.
In the absence of any universal effort thus far, various countries have adopted different approaches to combating inflation. The Reserve Bank of India (RBI) for instance has changed the repo rate; the Centre has slashed excise duty on fuels, apart from imposing a ban on the export of wheat and sugar. A few more steps are in the offing, if insiders are to be believed. Other nations have also taken steps to rectify this the situation. But economists are divided over the usefulness of such steps taken by different countries. Many are of the opinion that some of these steps may prove to be counterproductive in the near future. In their view, it would have been more appropriate if the countries had taken steps keeping at least regional interests in mind, in the absence of a combined global effort.
The world should adopt a two-pronged strategy to fight inflation. Firstly, all nations should put pressure on both Russia and Ukraine to end the ongoing war immediately. A partisan approach in this regard will cause more harm than good to the world. Reports indicate that a few western nations have decided to supply arms to Ukraine to prevent the Russian army from taking control of the country. Such a decision is suicidal to say the least as a continued war between the two nations will not only disturb world peace, but will also allow inflation rates to soar. Already, the price of crude oil is nearing $120 per barrel in the international market. If the war continues unabated, it will further fuel inflation. Secondly, economic activities should gain momentum and to reduce the fear of reemergence of the Covid virus, special emphasis should be given to the vaccination process to prevent the lethal virus from striking again. These steps will aid in bringing down the inflation rate and ease the suffering of the common man.