People in India as well as elsewhere in the world had to live with rising prices of food and other essentials this year, but they can hope for a bit of relief next year, according to a report of the UN Economic and Social Commission for Asia and the Pacific (UN-ESCAP).

“Inflation is predicted to improve in 2012,” says the 2011 year-end update of UN-ESCAP. However, it also said, “Inflation is forecast to decline in  2012 in export-led economies due to a reduction in demand emanating from the sluggish global environment.”

For countries like India where economy is more domestic demand orinted, the report suggested it would continue with the policies in tune to moderate the pace of inflation. “Contractionary monetary policies during the course of 2011 have somewhat moderated the pace of the increase in inflation in 2011, with the efforts forecast to bear greater fruit in 2012,” it said.   

The report forecast that India will grow at 7.8 percent in 2012 but the 2011 figure would only be 7.5 percent. China, it predicted, will grow at 8.5 percent in 2012 and 9.3 percent in 2011.

However, the report has a caveat for India’s growth. “India, for instance, is unlikely to see growth accelerate because policymakers continue to tighten interest rates as price rise remain at near double-digit levels.”

“The two largest developing economies in the region, China and India, have been more concerned with controlling price increase than with maintaining growth, which remains at robust levels,” the report held.

Read the report