Thursday, June 18, 2009

India's Inflation

India's WPI Inflation rate fell to -1.61% for the week ended on June 6 2009

SONAL VARMA, ECONOMIST, NOMURA: "The only significance is that this is the first negative WPI reading in the history of the series. "What is interesting is the decline in primary article prices this week. The high base effect will keep the WPI inflation in the negative zone for atleast three months. "The inflation momentum has been picking up and a continued rise in commodity prices will exert upward pressure on input costs. With consumer prices still high and signs of the economy stabilising, we judge that the rate cutting cycle is over."

RUPA REGE NITSURE, CHIEF ECONOMIST, BANK OF BARODA: "This is due to the high statistical base, but going forward inflationary risks are already in sight. Oil prices have more than doubled in the last one month and also the fact that primary article prices are not showing any signs of easing. "By end-March 2010 inflation is expected to be between 5.5 percent to 6 percent based on the current trends, when we may see the RBI going back to the tightening cycle."

GUNJAN GULATI, ECONOMIST, JP MORGAN CHASE: "As expected the headline inflation this week reported a negative print, led primarily by the high base last year. "On the overall prices, a sustained and sharp rise in global crude oil prices and delayed seasonal rainfall could likely be a big uncertainty going forward."

SHUBHADA RAO, CHIEF ECONOMIST, YES BANK: "It was a widely anticipated phenomenon. I can attribute this to largely a statistical base. I anticipate the trend to continue for the next couple of weeks. "However, inflation pressures are expected to gradually build up towards third and fourth quarter of the current fiscal. By (fiscal) year-end, we expect inflation to exceed 5.5 percent."

A PRASANNA, CHIEF ECONOMIST, ICICI SECURITIES PRIMARY DEALERSHIP: "It has come in along market expectations. I don't think this number has any significance. It is just a statistical occurance and has no monetary policy implications. "On a seasonally adjusted basis inflation is going up and I think the RBI will be focusing on that." "It could be in the negative zone for 2-3 months."

Source: EconomicTimes

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