Getting back to the framework, the crisis period, 2008–10, clearly falls into the bottom lefthand box, reflecting unfavourable global and domestic conditions. The financial crisis, of which the tipping point was perhaps the collapse of Lehman Brothers in September 2008, was the most vivid feature of the hostile global environment, but there were several other threats that also manifested themselves in that period.
Food inflation soared around the world in the first half of 2008, as did oil prices. Both these trends reinforced the inherent inflationary pressures that were being felt domestically as a result of the sustained high growth.