Do your eyes really believe it that Deflation is in India? Yes India has faced Deflation after 30 years. The long zooming Inflation rate which had reached almost 13% odd is now at -1.61% for the week ended 6th June (YoY).
The wholesale price-linked inflation, which was at 0.13 percent the previous week, last turned negative in 1977, according to the data released by the Federal Ministry of Commerce and Industry.
Main reasons for the decline : The main reason being fall in fuel prices as crude oil it is down to 70 dollars a barrel against 140 dollars a barrel during the same period a year ago.
But I am amazed that only crude oil can get such a big Indian economy (In fact a trillion dollar economy which just slipped down) in deflation. More over I don’t remember exactly around 2007 crude oil was around 50$ per barrel and at that time inflation was some thing around 4%. Recession can be one reason.
Inflation is when prices go up and deflation is when prices go down.
Both Inflation and Deflation are bad for economy. A urgent step is needed to be taken by Government at this movement.
One thing to notice is that for many things prices of goods have gone up instead of coming down !
What do you have to say on this !
