Inflation To Shrink With Price Hike: FM

by khalid on 18/09/2011 · 1 comment

Finance Minster Pranab Mukherjee claimed on Friday that the recent hike in the prices by the Reserve Bank Of India will hopefully bring inflation down to a much more ‘comfortable’ level soon. Since January 2010, this is the 12th time the RBI has hiked the key rates by 25 points as an effort to get the incessant inflation in control. However, finance minister is positive that this measure will get inflation settled to a more comfortable level sooner than later.

Mukherjee even said that the growth is most likely to pick up in the second half of the year even though it was affected in the first few months because of brutal monetary tightening. The GDP growth came down to 7.7% in the first 2011-2012 quarter from 7.8% prior to this quarter and 8.8% from last year. In addition to that, the industrial output growth also suffered a crash to 3.3%, the lowest in the last 21 months, in July 2011. The implications of the monetary tightening by the Reserve Bank of India are apparent in the economy but it still has not been able to tackle the inflation it is hoping to curb.

Food inflation is much above the comfortable level of 4-5; it was recorded to be 9.47% when the week ended on September 3. Inflation of the food in the country is still at peek while the inflation rate in August, which is 9.78%, is heading towards double digits. Headline inflation is still a matter of concern, the finance minister agreed.


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