At the time of writing the survey, inflation had gone up in most countries and has become an issue in both advanced and emerging economies. India's CPI-inflation at 5.6 per cent was within the targeted tolerance band thanks to easing of food inflation but its WPI-inflation has been in double digits (12.5%). The Survey expects this divergence to narrow down with waning of base effects. But India must look out for imported inflation, with elevated global-energy prices. With inflation worries mounting globally, there will be tightening of financial conditions and capital flows may shrink, which can slow down growth in emerging economies and affect currency exchange rates.