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January inflation could drop below 7 pc: Kaushik Basu

Press Trust of India
Jan 31, 2012 at 07:05pm IST

New Delhi: Amid signs of moderation in price rise situation in the country, the January inflation numbers are likely to drop below 7 per cent, said Chief Economic Adviser Kaushik Basu.

"Inflation figures are going down. The January figure, which you will get in middle of February, my expectation is that it is going to be below 7 per cent ," he said.

Basu, who also heads a Prime Minister appointed panel, was of the view that the March end inflation would be in the range of 6.5 to 6.8 per cent.

January inflation could drop below 7 pc: Basu

The Chief Economic Adviser also said the March end inflation would be in the range of 6.5 to 6.8 per cent.

The Wholesale Price Index (WPI) based inflation, which has remained in double digits for almost two years, declined to 7.47 per cent in December 2011 from 9.11 per cent in the previous month.

Besides, the food inflation, which has a weight of about 14 per cent in the WPI, has been in negative zone for four consecutive weeks since mid-December.

Also, the high base effect of last year would be one of the reasons for lower inflation, Basu added.

The RBI, which had adopted a tight monetary policy to tame price rise, is closely watching the inflation situation before taking any decision on interest rate cut.

"With the recent moderation in WPI and expected decline in the months to come with attendant implications for monetary policy, the investment could pick up momentum," Basu added.

The January inflation data is scheduled to be released on February 14.

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