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Walloped by inflation

Walloped by inflation
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First Published: Fri, Mar 21 2008. 12 36 AM IST
Updated: Fri, Mar 21 2008. 12 36 AM IST
The latest inflation data is an absolute shocker. There is little doubt thatthe pace of price increases has been worrisome. But the fact that they increased by 5.92% for the first week of March comes as a bolt from the blue.
Rising inflation is always a worry. What makes it even more of a problem is the fact that prices are accelerating at a time when economic growth is faltering. That makes the case for lower rates of interest very weak.
The government usually revises its inflation number two months down the line, to take better data on prices into account. So, the new inflation number could be an underestimate.
High inflation is a vote loser, since the poor do not have indexed incomes. We hope politicians do not chase absurd solutions such as trade bans and price controls to fight inflation in what could be an election year.
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First Published: Fri, Mar 21 2008. 12 36 AM IST
More Topics: Inflation | WPI | Economic growth | Views | Quick Edit |