Open

Coming up

Don't miss

Replay


LATEST SHOWS

AFRICA NEWS

Search of Air Algerie crash site continues

Read more

MEDIAWATCH

Sarkozy, Hollande and the scooter wars

Read more

MEDIAWATCH

Confusion online over Air Algérie flight

Read more

THE WORLD THIS WEEK

The World This Week - July 25th, 2014 (part 2)

Read more

THE WORLD THIS WEEK

The World This Week - July 25th, 2014

Read more

REPORTERS

Halal tourism on the rise

Read more

ENCORE!

Tunisia's Carthage International Festival turns 50

Read more

FRANCE IN FOCUS

WWI Centenary: the battle for Verdun

Read more

THE BUSINESS INTERVIEW

When big companies want to do good

Read more

  • Limited 12-hour humanitarian truce takes effect in Gaza

    Read more

  • Video: No investigation apparent at MH17 crash site

    Read more

  • In pictures: Devastation, debris at Air Algérie crash site

    Read more

  • Paris march for Gaza to go ahead Saturday despite police ban

    Read more

  • Kerry due in Paris for new round of Gaza ceasefire talks

    Read more

  • Washington Post reporter and his wife arrested in Iran

    Read more

  • French families grieve for Algerian plane crash victims

    Read more

  • Lithuania’s Navardauskas wins 19th stage of Tour de France

    Read more

  • LA Times wipes France off the map in air crash infographic

    Read more

  • Fans electrify the mood as Tour de France crosses the Pyrenees

    Read more

  • French lawyer files complaint against Israel at ICC

    Read more

  • Protest against Gaza offensive turns deadly in West Bank

    Read more

  • Halal tourism on the rise

    Read more

  • Ukraine names acting PM after Yatseniuk's shock resignation

    Read more

  • BNP to pay $80 million for defrauding Dept of Agriculture

    Read more

  • Deadly strike on UN shelter in Gaza Strip

    Read more

  • Pope meets Christian woman sentenced to death in Sudan

    Read more

Business

India's inflation nears zero

Video by FRANCE 24

Latest update : 2009-03-19

Inflation in India has dropped close to zero, according to official data, as the threat of deflation in the country grows. The latest fall in inflation, sharper than expected, stoked expectations of a new cut in interest rates.

AFP - Inflation in India has dropped close to zero, official data showed Thursday, as Asia's third-largest economy continued a sharp slide towards deflationary territory.

Annual inflation fell to 0.44 percent for the week ended March 7 from 2.43 percent the previous week, according to the Wholesale Price Index, the most watched cost-of-living measure.

The fall stoked expectations the central bank would cut interest rates again in a bid to jolt the economy out of a looming deflationary period.

India's inflation rate has slid from a 13-year high of 12.91 percent last August due to a slump in oil and other global commodity prices as well as the effects of the worldwide slowdown.

The central bank still "has the leeway to lower rates further," said D.K. Joshi, principal economist at ratings agency Crisil.

The bank has slashed its key short-term lending rate to commercial banks by 400 basis points since October to a record low of five percent to spur growth.

The latest drop, bringing inflation to its lowest level since the current inflationary series began in 1993-94, was sharper than expected. Economists had forecast inflation at between 0.80 and 0.94 percent.

The inflation fall comes as India's Congress-led government faces elections starting in April. The country's millions of poor, whose voting support is crucial, were hardest hit by the price surges of the past few years.

But the sting in the tail for the government has been a slowdown in growth stemming from what one analyst called "demand destruction" as India starts to feel the full impact of the global slump.

The government expects growth to slacken this year to 7.1 percent -- the weakest in six years --- after three years of heady annual expansion of nine percent.

But economists say the figure will be below seven percent and warn the economy will lose more steam next year, slowing to 5.5 percent or lower -- still strong by global standards but not enough to raise the living standards of India's destitute.

Most recent figures showed the economy grew at its slowest pace in six years at 5.3 percent in the third quarter to December, down from 8.9 percent in the same period a year earlier.

Inflation will hit zero by the end of this fiscal year later this month, according to Axis Bank economist Saugata Bhattacharya. It would mark India's first bout of deflation since March 1976, according to central bank records.

Some analysts said they expected deflation to be short-lived but others said it could last until year end.

Inflation could remain negative until the end of 2009 "driven by the ongoing demand destruction" as well as the high base effect of the previous year when inflation was at elevated levels, Goldman Sachs economist Tushar Poddar said.

"In 2010 we expect inflation to come back due both to a gradual pickup in demand and a low base from 2009," he said.

Date created : 2009-03-19

COMMENT(S)