According to a mid-January data release from Statistics Mauritius (the central statistics agency), the consumer price index (CPI) rose by 6.8% year on year in December 2021, taking annual average inflation to 4% in 2021, its highest level since February 2018. The main drivers of inflation in 2021 were food and non-alcoholic drink prices (which increased by 10% year on year), alcoholic beverages and tobacco products (which rose by 9.7%), and transport (up by 7.2%). The prices of furnishings, household equipment and routine household maintenance also grew sharply, by 11% (see Figure below). Higher inflation is attributable to the global increase in food and fuel prices, and the cost of freight due to the coronavirus pandemic. As a small island state, Mauritius has a high dependence on food and fuel imports, and both commodities have a heavy weighting on the CPI. The inflationary effect of costlier imports was exacerbated by a weakening Mauritian rupee, which depreciated from MR40.30:US$1 in December 2020 to MR43.91:US$1 in December 2021. Page 2 of 3 Business Economics - MGT6008 Food and transport prices drive up inflation in Mauritius (% change, year on year) -Consumer prices Food and non-alcoholic beverages -Transport Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2021 Source: Bank of Mauritius 12 9 6 3 0 -3 a) Define inflation and discuss its causes and consequences. b) [10 marks] Using examples to illustrate your arguments, discuss the various tools available to the Mauritian government to control inflation.
According to a mid-January data release from Statistics Mauritius (the central statistics agency), the consumer price index (CPI) rose by 6.8% year on year in December 2021, taking annual average inflation to 4% in 2021, its highest level since February 2018. The main drivers of inflation in 2021 were food and non-alcoholic drink prices (which increased by 10% year on year), alcoholic beverages and tobacco products (which rose by 9.7%), and transport (up by 7.2%). The prices of furnishings, household equipment and routine household maintenance also grew sharply, by 11% (see Figure below). Higher inflation is attributable to the global increase in food and fuel prices, and the cost of freight due to the coronavirus pandemic. As a small island state, Mauritius has a high dependence on food and fuel imports, and both commodities have a heavy weighting on the CPI. The inflationary effect of costlier imports was exacerbated by a weakening Mauritian rupee, which depreciated from MR40.30:US$1 in December 2020 to MR43.91:US$1 in December 2021. Page 2 of 3 Business Economics - MGT6008 Food and transport prices drive up inflation in Mauritius (% change, year on year) -Consumer prices Food and non-alcoholic beverages -Transport Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2021 Source: Bank of Mauritius 12 9 6 3 0 -3 a) Define inflation and discuss its causes and consequences. b) [10 marks] Using examples to illustrate your arguments, discuss the various tools available to the Mauritian government to control inflation.
Chapter13: Inflation
Section: Chapter Questions
Problem 2SQP
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![According to a mid-January data release from Statistics Mauritius (the central statistics agency), the
consumer price index (CPI) rose by 6.8% year on year in December 2021, taking annual average
inflation to 4% in 2021, its highest level since February 2018. The main drivers of inflation in 2021
were food and non-alcoholic drink prices (which increased by 10% year on year), alcoholic beverages
and tobacco products (which rose by 9.7%), and transport (up by 7.2%). The prices of furnishings,
household equipment and routine household maintenance also grew sharply, by 11% (see Figure below).
Higher inflation is attributable to the global increase in food and fuel prices, and the cost of freight due
to the coronavirus pandemic. As a small island state, Mauritius has a high dependence on food and fuel
imports, and both commodities have a heavy weighting on the CPI. The inflationary effect of costlier
imports was exacerbated by a weakening Mauritian rupee, which depreciated from MR40.30:US$1 in
December 2020 to MR43.91:US$1 in December 2021.
Page 2 of 3
Business Economics - MGT6008
Food and transport prices drive up inflation in Mauritius
(% change, year on year)
-Consumer prices Food and non-alcoholic beverages -Transport
Jan
Feb
Mar
Apr May
Jun
Jul
Aug Sep Oct
Nov
Dec
2021
Source: Bank of Mauritius
12
9
6
3
0
-3
a)
Define inflation and discuss its causes and consequences.
b)
[10 marks]
Using examples to illustrate your arguments, discuss the various tools available to the
Mauritian government to control inflation.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Faec5ffe6-25c6-466f-95aa-54dee0e65e8a%2Fb9c7b654-f25a-46c2-b343-0c08d4809970%2F4jf7ev_processed.jpeg&w=3840&q=75)
Transcribed Image Text:According to a mid-January data release from Statistics Mauritius (the central statistics agency), the
consumer price index (CPI) rose by 6.8% year on year in December 2021, taking annual average
inflation to 4% in 2021, its highest level since February 2018. The main drivers of inflation in 2021
were food and non-alcoholic drink prices (which increased by 10% year on year), alcoholic beverages
and tobacco products (which rose by 9.7%), and transport (up by 7.2%). The prices of furnishings,
household equipment and routine household maintenance also grew sharply, by 11% (see Figure below).
Higher inflation is attributable to the global increase in food and fuel prices, and the cost of freight due
to the coronavirus pandemic. As a small island state, Mauritius has a high dependence on food and fuel
imports, and both commodities have a heavy weighting on the CPI. The inflationary effect of costlier
imports was exacerbated by a weakening Mauritian rupee, which depreciated from MR40.30:US$1 in
December 2020 to MR43.91:US$1 in December 2021.
Page 2 of 3
Business Economics - MGT6008
Food and transport prices drive up inflation in Mauritius
(% change, year on year)
-Consumer prices Food and non-alcoholic beverages -Transport
Jan
Feb
Mar
Apr May
Jun
Jul
Aug Sep Oct
Nov
Dec
2021
Source: Bank of Mauritius
12
9
6
3
0
-3
a)
Define inflation and discuss its causes and consequences.
b)
[10 marks]
Using examples to illustrate your arguments, discuss the various tools available to the
Mauritian government to control inflation.
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