Inflation dips to 4.39%, RBI may cut key rates
Times of India, February 13, 2009, Page 21
NEW DELHI: Inflation has dipped to 4.39% in the week ending January 31, the lowest level since January 12, 2008, mainly due to recent fuel price cuts by government. On January 28, government had cut petrol price by Rs 5 a litre, diesel by Rs 2 a litre and LPG by Rs 25 per cylinder. In the week ending January 24, inflation was at 5.07%.
Such a steep fall in inflation will give RBI enough room to cut key rates,paving the way for banks to lower interest rates. In the last two weeks, inflation declined by 1.25 percentage points. Many economists feel that if government and RBI do not check this fall now, inflation may turn negative by April, triggering a deflation scenario, which means, in the absolute term, prices may start falling.
At the same time, as the industrial production has turned negative in December, economists feel that government should announce another stimulus package and RBI should cut rates to revive the growth.
During the week, consumer items like liquor became cheaper by 15%, fruit and vegetable by 3% and tea by 1%. During the week, prices of groundnut oil dipped 3%, while imported edible oil and mustard oil declined by 2% each.
Times of India, February 13, 2009, Page 21
NEW DELHI: Inflation has dipped to 4.39% in the week ending January 31, the lowest level since January 12, 2008, mainly due to recent fuel price cuts by government. On January 28, government had cut petrol price by Rs 5 a litre, diesel by Rs 2 a litre and LPG by Rs 25 per cylinder. In the week ending January 24, inflation was at 5.07%.
Such a steep fall in inflation will give RBI enough room to cut key rates,paving the way for banks to lower interest rates. In the last two weeks, inflation declined by 1.25 percentage points. Many economists feel that if government and RBI do not check this fall now, inflation may turn negative by April, triggering a deflation scenario, which means, in the absolute term, prices may start falling.
At the same time, as the industrial production has turned negative in December, economists feel that government should announce another stimulus package and RBI should cut rates to revive the growth.
During the week, consumer items like liquor became cheaper by 15%, fruit and vegetable by 3% and tea by 1%. During the week, prices of groundnut oil dipped 3%, while imported edible oil and mustard oil declined by 2% each.
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