Subbarao: Cut in fuel prices should ease inflationary pressures.
Our Bureau
Mumbai, Dec. 6 The Reserve Bank of India expects the year-end inflation figures
to be significantly lower than the seven per cent projected earlier.
Commodity prices fall
In its mid-term review of the monetary policy in October, RBI had estimated the
year-end inflation to be around seven per cent. However, headline inflation, as
measured by the wholesale price index, has declined in the past four weeks
owing to falling commodity prices and slowing domestic demand.
"Inflation would be significantly lower than the seven per cent projected
earlier as the decline in inflation from the October policy announcement has
been sharper than what we had anticipated," said Dr D. Subbarao, Governor, RBI.
For the week ended November 22, India's annual inflation rate stood at 8.4 per
cent, as against 8.84 per cent in the previous week. Inflation had touched a
peak of 12.91 per cent in August this year driven by high commodity and fuel
prices.
The reduction in prices of petrol and diesel announced on Friday should also
further ease inflationary pressures, according to the statement released by RBI.
However, the governor declined to estimate the year-end inflation number.
"In the January policy statement, a firm estimate of the expected year-end
inflation should be available," said Dr Subbarao.
Food articles trend
However, RBI statement points out that the consumer price inflation for
September and October increased due to the firm trend in food articles
inflation and the higher weight of food articles in measures of consumer price
inflation. RBI expects the consumer price inflation to soften in the months
ahead due to the correlation between wholesale and consumer price inflation.
http://www.thehindubusinessline.com/2008/12/07/stories/2008120751150300.htm
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