Deep Dive with AKB: Why is inflation rising when demand remains low?

 As the Indian economy is reopening after several months of no activity amid strict coronavirus-induced lockdowns, some indicators are pointing to an economic recovery of sorts. But there also are some very confusing paradoxes and mixed signals. For instance, even as demand in the economy is squeezed, inflation continues to be high and food prices are going through the roof. In fact, retail inflation climbed to an eight-month high in September, and wholesale inflation to a seven-month high.

Why? What explains high retail prices in these times? What impact will it have on interest rates? And when could we expect food prices to see some cooling?

Let’s take a deep dive with AKB to understand.