Inflation to moderate by March'12: CEA

Food inflation for the week ended June 25, was recorded at 7.61 per cent

PTI | July 14, 2011



Chief economic advisor Kaushik Basu expects headline inflation to moderate to around 6 percent by March 2012 from the current rate of over 9 per cent, even as he said food inflation might stay elevated due to base effect.

"I am expecting the (headline) inflation to come down to little over 6 per cent by March 2012," he said while speaking at a seminar organised by International Growth Centre here.

Basu further said that the government should try to target an inflation rate of 4 per cent.

Inflation, as measured by wholesale price index (WPI), rose to 9.44 per cent in June. It was recorded at 9.06 per cent in May.

The April numbers, too, were revised upwards to 9.74 per cent from 8.66 per cent. Headline inflation has stayed above 9 per cent mark since December 2010.

"Inflation targeting will take some time. We recommend a target of 4 per cent," Basu said.

Meanwhile, food inflation surged to 8.31 per cent for the week ended July 2 on the back of soaring prices of protein- based items, cereals and vegetables.

Food inflation for the week ended June 25, was recorded at 7.61 per cent.

To tame the high inflation that affects poor the most, the RBI has hiked interest rates 10 times since March 2010 despite the risks of slowdown in growth.

 

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