Tuesday, May 27, 2008

India's inflation rate may be revised to 10%: reports the Economist

India's inflation rate may be revised to 10 per cent from the latest estimate of 7.82 per cent as data for prices of different commodities is updated, London-based publication The Economist has said.

"Delays in data collection in India can mean big revisions to inflation... The latest wholesale price rate inflation rate might therefore be pushed up to 9-10 per cent," noted The Economist in its cover story on global inflation.

India faces the challenge of high inflation in the coming months, especially due to rising international crude oil and food prices.

"Prices are also rising partly because loose monetary conditions in emerging economies have boosted domestic demand," the prestigious journal said.

India revised inflation figures for the week ended March 15 to 8.02 per cent from the earlier estimate of 6.68 per cent.

Referring to ban on futures trading in agricultural commodities, it said, "In the short run such measures may help cap inflation and avoid social unrest, but in the long run they do more harm than good."

Preventing rising prices reduces the incentive for farmers to increase supply and for consumers to curb demand, thus prolonging the very imbalance that has stoked prices.

It further said if measured correctly, five of the ten biggest emerging economies could have inflation rates of 10 per cent or more by mid-summer.

"Two-thirds of the world's population may then be struggling with double-digit inflation."

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