Central banks have work to do on price stability and inflation targeting

The consumer price index (CPI) has extensive relevance in people's daily lives. Periodic review of CPI composition and weights assigned will keep it robust and relevant

Of late, central banks have received criticism for their handling of price stability and inflation targeting through conduct of monetary policy. The main issue being consumer sentiment not in sync with economic fundamentals. Post-pandemic, high prices and costly borrowings have become a major worry. Prices have gone up of everything that an average household buys. 

 

Academics and economists in advanced economies have given a call to handle the disconnect between post-pandemic inflation statistics and depressed consumer sentiment. Disconnect entailed higher estimated inflation pinch felt by an average family in 5-7 per cent range over official data, namely the consumer price