Overall inflation may recede to 6% by March: Finance Minister says
Overall inflation may recede to 6 per cent and the Reserve Bank of India (RBI) may start cutting key rates by March next year, Finance Minister Pranab Mukherjee has said.
The government data released on Thursday revealed that prices of primary food articles, which accounts for 14 per cent of the wholesale price index, jumped merely 0.42 per cent over the week to December 17 from the year-ago period.
Speaking to reporters, Mr. Mukherjee said, "If this trend continues then you will have (fiscal) year-end (headline) inflation around six per cent."
However, he added that inflation couldn't be lower than six per cent simply because inflationary pressure remained higher in the previous weeks.
The food inflation dropped due to drastic fall in the prices of vegetables and fruits. In the week ended December 10, food inflation was at 1.81 per cent. In November it was recorded at 8.54 per cent.
A drop in price inflation will also incite the Reserve Bank of India to ease its monetary policy. The central bank has raised the repo rate, the rate at which banks borrow from it, a total of 13 times in order to tame inflation.
