Can manage inflation if food prices keep declining: PranabPosted: January 12, 2012
Expressing satisfaction over the fall in food prices for the second week in a row, Finance Minister Pranab Mukherjee said if the trend continues for some more time, overall inflation will become manageable.
“Food inflation is still negative… There is a declining trend… If this trend continues, then the overall inflation will be manageable,” Mr. Mukherjee told reporters in New Delhi.
The fall in the rate of price rise of food items since the first week of November is substantial, as it has plummeted from double-digit territory into the negative zone.
The Reserve Bank had earlier said it expects inflation to remain elevated till December on account of the demand-supply mismatch before moderating to 7 per cent by end of the fiscal.
Comment: What lie from the govt! Is food cheaper today than it was say six months ago? No, it is not. The prices may have fallen slightly on certain items but overall food is much more expensive as compared to one year ago. The Rupee has been devalued by high govt deficit financing and busybodies in the RBI. Once currency value has eroded, even if the prices fall say from X to X/3 the value of one unit of currency say Y is Y/2. Indian citizens savings have been wiped out by at least 5% due to the Rupee being debased and the purchasing power by much more. Real wages have not increased. Credit has been tightened due to massive credit expansion since the 1990s. Higher inflation will lead to higher unemployment.
When the govt says inflation can be controlled, they are right, they can control the money supply.