Inflation in India

The industrial houses as well as the policy makers are all worried with the constant increase of the inflation in India since March of 2008. In economics, inflation refers a general increase in the prices measured against a general level of the power to purchase. In earlier times this term used to refer to increase in money supply. This is currently referred as monetary inflation or expansionary monetary policy. The measure of inflation is measured by comparing two sets of goods at different times.

The computing for the increase in the cost which is not reflected by increase in the quality is carried out. The various measures of inflation depend on the particular circumstances. The most popularly known method is the CPI. In this method the measures are the consumer prices, as well as the Gross Domestic Product (GDP) deflator. In this way the total domestic economy is measure. The prevalent view for economics (mainstream) is due to the interaction of the supply of money with output and interest rates. The views of the economists are broadly divided in two camps- the "monetarists" and the "Keynesians".

The related concepts for calculating inflation of a country comprise deflation, disinflation as well as hyper-inflation. Deflation is in general the falling level of prices. The disinflation and the hyper-inflation are all important aspects while calculating the inflation rate of a country.

 

Inflation Rate in India

The inflation rate in India was last reported to be 9.72 percent in September of 2011. Since the year of 1969 till the year of 2010, the average inflation rate in India was 7.99 percent. The inflation rate of the country reached an historical high of 34.68 percent during the month of September in the year of 1974. The lowest was recorded in the month of May in the year of 1976. It was reported to be as low as -11.31. The inflation rate in general refers to the rise in the prices measured against the purchase power at a standard level. The best known measure of Inflation is the CPI which measures the consumer prices. The GDP deflator also measures inflation in the total domestic economy.
 

India Inflation Rate Chart (in %)

Year	Jan	Feb	Mar	Apr	May	June	July	Aug	Sept	Oct	Nov	Dec
2011	9.35	9.54	9.68	9.70	9.56	9.44	9.22	9.78	9.72	9.73	9.34
2010	16.22	14.86	14.86	13.33	13.91	13.73	11.25	9.88	9.82	9.70	8.33	9.47
2009	10.45	9.63	8.03	8.70	8.63	9.29	11.89	11.72	11.64	11.49	13.51	14.97
2008	5.51	5.47	7.87	7.81	7.75	7.69	8.33	9.02	9.77	10.45	10.45	9.70

 

Inflation in India in Future

It is expected that the emerging markets, including India, will perform well withstanding challenges like higher inflation as well as the rising prices of the oils. It is assumed that the price of the commodity will continue to maintain the upward march since the developing countries are maintaining a very strong growth momentum motivated by the by robust consumption. The emerging markets will continue to do well. The strong growth momentum is accelerating the growth. Indian economy is expected to grow at 8 percent in this fiscal year 2011-12. The developed markets are growing at the rate of 1.6 percent. The emerging markets are experiencing the bull nature. The bear nature is short-lasting in these economies. This bull phase is going through a 20 year high. The growing price of oil in the country is the factor behind the growth of the price of all other commodities in India.

 

Food Inflation in India in October 2011

Food inflation soared to nine month high of 12.21% for the week ended October 22, 2011 from 11.4% in the previous week. The prices of onion dropped by 20.33% from a year earlier while wheat prices dropped by 1.54%. Pulses, fruits, and the protein-based items remained very costly. However, the note-worthy matter is that the prices of the fruits rose by 11.65% year-on-year. The price of the eggs, meat and fish rose by 13.36% year-on-year. The total inflation rate in India in the month of September of 2011 was at 9.72 per cent. We have the shares of oil companies in the portfolio of our country. We also have companies in the areas of iron ore, copper, platinum, nickel and coal. The per-capita income of a general Indian is on rise. Hence, the demand for the commodity will remain strong going ahead. The energy consumption is going up in the Asian countries as well as the other developing countries. So the fate of India can be predicted in the field of price rise. The food inflation in India is based on wholesale price index (WPI).

Last Updated 1/16/2012