New Delhi: Inflation may drop to 10% by December from its current level of over 12%, Rajya Sabha member and former head of the Prime Minister’s economic panel C Rangarajan has said.
“My estimate is that probably by December, inflation rate may go down to 10%,” Rangarajan told reporters on the sidelines of a Ficci seminar on financial inclusion in New Delhi on Monday.
The former RBI governor also expressed optimism that industrial growth, which improved in July, would continue the trend in the months to come. Industrial growth recovered to 7.1% in July on account of resurgence in capital and consumer durable goods sectors, after a dismal performance in the preceding two months.
He said inflation last year was moderate towards the end of December, so base effect will heighten inflation in the current year.
The base effect relates to the inflation level in a year-ago period. If the rate of inflation was low in the corresponding period a year ago, its level in the current year would be higher.
Inflation stood at 12.10% for the week ended 30 August, despite moderation for the third week in a row.