Mumbai (AsiaNews) - Returning to India after a few months of abroad, just buying some bread and few bananas I immediately realized how much inflation had gone up in this country. In January 2011 it was at 9.47; in December 2011 it was at 7.11%. So I was surprised to read in the newspaper that inflation dropped to an over two years low at 6.55% in January due to cheaper food prices. But this level is not comfortable for the Government and RBI (Reserve Bank of India). They hope the price index will decline to 6 % by March. The Finance Minister however warned that high prices of edible oils and milk could stoke food inflation, which is currently ruling in the negative.
"Moderation in inflation would continue in the coming months, though softening in the prices of manufactured goods despite the rapid decline in non-food primary inflation, may be more gradual. We now expect that the March end 2012 inflation will be closer to six per cent," said Finance Minister Mukherjee.
"I am really happy that it has moderated, said Montek Singh Ahluwalia, deputy chairman of the Planning Commission, "I hope we will be able to keep inflation under control in coming months. I had said that if inflation does not come down in January, the people can legitimately criticize the government."
The government and RBI generally use wholesale price index (WPI) as the basis for their decision-making process. The highest inflation, of course, is of fuel and power still at 14.21%.