Govt to see inflation fluctuations in coming months
India is likely to see inflationary fluctuations in the next three months or so, but the overall trend for prices is to moderate, Finance Minister Pranab Mukherjee said on Wednesday.
February 02, 2011 / 20:50 IST
India is likely to see inflationary fluctuations in the next three months or so, but the overall trend for prices is to moderate, Finance Minister Pranab Mukherjee said on Wednesday.
India is currently battling soaring price rises, causing a major headache for the ruling government, but policymakers have cautioned against panic reaction.Headline inflation moved up to 8.43% in December from a year ago on higher food prices, and the overall prices are widely seen remaining firm on higher food and global oil prices.Oil continued to climb on Wednesday on worries that unrest in Egypt would trigger regime change across the Middle East and North Africa, driving North Sea Brent crude futures towards a 28-month high."There have been fluctuations, monthly or weekly, during the last nine months. Inflationary pressures have seen fluctuations. In the large economy of India, these type of periodical fluctuations are not unheard of," Mukherjee told reporters."In the remaining three months or so, there may be some fluctuations...but the basic fundamentals of the economy are strong."Under pressure over its inability to stem soaring food prices for much of the past year, the government has missed many of its own projections on inflation and Mukherjee's statement may be a way of tempering expectations of a swift drop in prices.High prices have prompted the central bank to raise its key rates seven times since March and revise upwards its forecast for inflation for the end of the year to 7%.Mukherjee said stock markets have seen volatility in the past few days due to selling pressures from foreign institutional investors but the government still expects 8.5% economic growth in the current financial year ending March."Manufacturing activity is on a strong growth path, in spite of the monthly fluctuations in the Index of Industrial Production witnessed in recent months," he said.Mukherjee also said India would end the fiscal year with a "better-than-projected fiscal balance", which would be lower than the government's earlier projection of a fiscal deficit of 5.5% of GDP. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
