The Hindu Business Line : RBI sees inflation rate below 7% by year-end

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.

Related Stories:
Cheaper fuel pulls down inflation rate to 8.4%
Inflation momentum slowing: RBI Governor

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