• News
  • Columns
  • Interviews
  • BW Communities
  • Events
  • BW TV
  • Subscribe to Print
  • Editorial Calendar 19-20
BW Businessworld

Inflation To Come Down Next Financial Year

Photo Credit :

The Finance Minister Pranab Mukherjee in his Union Budget 2012-13 speech on Friday said that he expects the inflation and current account deficit to come down in the next financial year.

The Economic Survey 2011-12 had projected the inflation for the next year to come down as well. Inflation is expected to moderate to 6.5-7 per cent by March end but spiralling global crude oil prices pose a challenge in the coming months, said the Economic Survey 2011-12.

The Economic Survey, tabled in Parliament by Finance Minister Pranab Mukherjee on Thursday also said that inflation would further moderate during the course of next fiscal on account of tightening of monetary policy by the Reserve Bank and other measures.

"By March 2012, headline inflation is expected to fall to 6.5 -7 per cent and further moderate in the months ahead, barring 'unexpected shocks'..." it said.

The survey said that recent geo-political uncertainties are once again putting pressure on crude oil prices globally which represent major risk and challenge ahead.

"The best course of action would be to persist with regular steps-adjustment of domestic energy prices which will help reduce inflationary pressure and fiscal consolidation efforts," it said.

Taking stock of the price scenario throughout the year, the survey had observed that in the current financial year, the gap between wholesale price index (WPI) and consumer price index (CPI) inflation has significantly narrowed due to drastic fall in food inflation.

The headline inflation, after remaining in single digit from August 2010 to August 2011, briefly touched double digits at 10.1 per cent in September 2011 but came down to 6.5 per cent in December 2011.

"The major drivers of food inflation during the current financial year were milk, eggs/meat/fish, gram and edible oils. WPI food inflation (weight 24.3 per cent) has significantly dropped from 20.2 per cent in February 2010 to 1.6 per cent in January 2012," it said.