Inflation will average to 9% this fiscal: CMIE

Inflation will average to 9 per cent in FY’11 compared with 3.6 per cent in the preceding fiscal, a leading economic think-tank has said.

“Unseasonal rainfall in October and November 2010 damaged the production of some crops, including onions... In addition, exports of cotton and sugar have been permitted...

Incorporating all these factors, we estimate that the inflation will average to 9 per cent in 2010-11 compared with 3.6 per cent in the preceding fiscal,” the Centre for Monitoring Indian Economy (CMIE) said in its latest review of the country’s economy.

Between April and December 2010, the inflation stood at 9.4 per cent against 1.7 per cent in the corresponding period of 2009.

“Major contributors include fruits, milk, eggs-meat-fish, condiments-spices, raw cotton, fuel and power, textiles and basic metals, alloys and metal products,” the CMIE said.

The think-tank foresees easing of inflation to 8.1 per cent during the fourth quarter of the current fiscal from 10.6 per cent in the first quarter and 9.3 per cent in the second quarter. During the third quarter ended December 2010, it stood at 8.3 per cent.

“Looking at the developments at the sectoral level in the remaining period of 2010-11, we expect that the year-on-year changes in WPI of food articles will be higher at 16.8 per cent on account of higher inflation in milk, vegetables, fruits and eggs-meat-fish,” it said.

Likewise, inflation in the fuel group is expected to drop from 14 per cent in the first quarter of 2010-11 to 10 per cent in the last quarter. In the manufactured goods, it is expected to drop from 6 per cent to 3.5 per cent, the CMIE said.

Among manufactured goods, inflation in food products, beverages, textiles, wood and wood products, chemicals and chemical products and basic metals will be lower in the last quarter of FY’11 than in the quarter ended June 2010, the think-tank said.

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