Average inflation for FY10 to be modest at 0.5%: CMIE

Average inflation for FY10 to be modest at 0.5%: CMIE

Mumbai: The average inflation for this fiscal will be modest at 0.5%, higher than the earlier projection of 0.1%, a leading economic think-tank said in its latest report.

The upward revision is mainly on account of a spurt in the prices of sugar, khandsari and gur, the report said, adding, the upward revision is sharp, yet negative as compared to the 8.3% average inflation recorded in FY09.

“The wholesale price index (WPI) will start rising (after November) and inflation is expected to reach 3% by the end of March 2010. Average inflation for the year will be modest at 0.5%," Centre for Monitoring Indian Economy (CMIE) forecast in its monthly report on the state of the Indian economy.

The WPI was down in the past seven weeks, till July 2009 and the decline is expected to continue till October-November this year, CMIE said.

The report said weak global growth prospects have kept company prices in check in the international market and the same sentiment was being reflected in the domestic market.

According to CMIE, the prices of basic metal and metal products are projected to decline by 10.5% in the current fiscal.

Likewise, the prices of chemical and chemical products and rubber and rubber products are also expected to decline by 2.5%, the report said, adding, inflation in groups other than these manufactured product groups is also expected to remain low in FY10.

The only exception, however, is the manufactured food products group, which includes sugar, gur, khandsari and several other groups, the report said.

“The rise in WPI of manufactured food products is now placed higher at 10.2% during the current fiscal as against the 4.5% projected earlier," CMIE said.