Inflation climbs to 0.61% on higher food, metal prices
The Financial Express, May 22, 2009, Page 2
fe Bureau, New Delhi
Inflation rose to 0.61% for the week ended May 9 from 0.48% in the previous week on higher food and metal prices, but analysts said it could turn negative in June and give more freedom to the Reserve Bankof India (RBI) to cut rates for stimulating a slowing economy. The inflation was at 8.57% during the corresponding week of the previous year.
A survey of professional forecasters by the RBI said the wholesale price index based inflation may decline 1.4% in the June quarter, as the base effect kicks in from May onwards.
While projecting a 4% inflation rate by the year end, the RBI has ruled out chances of a sustained deflation. The government has revised the inflation figure for the March 14 week to 0.71% from 0.27%.
Analysts note that forecasts of normal monsoon could boost agricultural production, easing pressure on food prices, which have been holding up.
The RBI and the new government to be sworn in on Friday are likely to focus on boosting growth, which has slipped below 7% in 2008-09.
The central bank is widely expected to cut its policy rates by another 50 basis points in the near term. The RBI has projected a GDP growth of 6% in this fiscal. This is the 10th week in a row when inflation stood below the 1% indicating softer instance towards interest rate.
“There is room for cutting rates if inflation remains low during the year,” said Punjab National Bank CMD KC Chakrabarty.
The average inflation during 2009-10 is projected to remain negligible at 0.1% as against 8.3% in 2008-09, according to the Centre for Monitoring Indian Economy (CMIE). “Expectation of inflation slipping into the negative terrain remains intact, though with a slight delay.
It remains well below the RBI’s comfort zone and amidst positive news on monsoons upside risk remain limited,” said Standard Chartered Bank economist Anubhuti Sahay.
The yield on the benchmark ten year government bond closed at 6.43%, above previous close of 6.35%, ahead of the Rs 15,000 crore bond auction on Friday. The rupee rose for the fifth day in a row closing at Rs 47.37 a dollar on Thursday, taking its gains to as much as 4.3% this week, on the back of a weakening dollar, and expectations of a sharp increase in capital inflows into the Indian economy after the Congress government won a decisive mandate to run a stable government.
The Financial Express, May 22, 2009, Page 2
fe Bureau, New Delhi
Inflation rose to 0.61% for the week ended May 9 from 0.48% in the previous week on higher food and metal prices, but analysts said it could turn negative in June and give more freedom to the Reserve Bankof India (RBI) to cut rates for stimulating a slowing economy. The inflation was at 8.57% during the corresponding week of the previous year.
A survey of professional forecasters by the RBI said the wholesale price index based inflation may decline 1.4% in the June quarter, as the base effect kicks in from May onwards.
While projecting a 4% inflation rate by the year end, the RBI has ruled out chances of a sustained deflation. The government has revised the inflation figure for the March 14 week to 0.71% from 0.27%.
Analysts note that forecasts of normal monsoon could boost agricultural production, easing pressure on food prices, which have been holding up.
The RBI and the new government to be sworn in on Friday are likely to focus on boosting growth, which has slipped below 7% in 2008-09.
The central bank is widely expected to cut its policy rates by another 50 basis points in the near term. The RBI has projected a GDP growth of 6% in this fiscal. This is the 10th week in a row when inflation stood below the 1% indicating softer instance towards interest rate.
“There is room for cutting rates if inflation remains low during the year,” said Punjab National Bank CMD KC Chakrabarty.
The average inflation during 2009-10 is projected to remain negligible at 0.1% as against 8.3% in 2008-09, according to the Centre for Monitoring Indian Economy (CMIE). “Expectation of inflation slipping into the negative terrain remains intact, though with a slight delay.
It remains well below the RBI’s comfort zone and amidst positive news on monsoons upside risk remain limited,” said Standard Chartered Bank economist Anubhuti Sahay.
The yield on the benchmark ten year government bond closed at 6.43%, above previous close of 6.35%, ahead of the Rs 15,000 crore bond auction on Friday. The rupee rose for the fifth day in a row closing at Rs 47.37 a dollar on Thursday, taking its gains to as much as 4.3% this week, on the back of a weakening dollar, and expectations of a sharp increase in capital inflows into the Indian economy after the Congress government won a decisive mandate to run a stable government.
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