Friday, December 14, 2012

The WPI Data and Possible After-Effects

Just the utterance of the topic ‘inflation’ will transport you to a world of apprehension in the context of economy. A high inflation rate has no wonder affected the Indian economy to a great extent for several months. The report is now somewhat otherwise.

Recently with India's main inflation gauge WPI (wholesale price index) rising 7.24 percent from a year earlier against the expectations of 7.6 percent, the Indian economy may be escaping a long period of price pressure. A rate cut by the Reserve Bank of India (RBI) is possible in the New Year month. The RBI’s policy meet on December 18 may not see a rate cut but an 8 percent cut is possible in January as per market experts.

It is in 10 months in November that the WPI cooled to its weediest pace. According to a leading economist, India’s inflation will drop below 6 percent next year. A chain of rate cuts is then possible.

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