Press Information Bureau

Government of India

Ministry of Finance

16-January-2012 17:47 IST

Finance Minister Confident that Moderation in Inflation Would Continue in the Coming Months and Headline Inflation should be between 6 and 7% in March End 2012

The Union Finance Minister Shri Pranab Mukherjee said that the decline in the monthly headline inflation for December 2011 to 7.47% as against 9.11% in November 2011 was mainly due to significant decline in inflation for primary articles including food inflation in the month of December 2011. Shri Mukherjee was reacting to the monthly headline inflation data which was released today for December, 2011. The Finance Minister Shri Mukherjee said that he is confident that moderation in inflation would continue in the coming months though softening in the prices of manufactured goods despite the rapid decline in non-food primary inflation may be more gradual. The Finance Minister said that headline inflation should be between 6 and 7 per cent in March end 2012.

The Finance Minister Shri Mukherjee said that alongwith the IIP numbers for November 2011, the recent headline inflation figures indicate some improvement in the overall macro-economic parameters in the second half of 2011-12. The Finance Minister said that this trend is likely to consolidate in the coming months with some policy correctives.

The Finance Minister Shri Mukherjee said that the manufactured inflation and inflation in the power group of items have also decline though only marginally, therefore, continued to be a cause of concern. The annual rate of inflation (year on year) for December 2011 has declined to 7.4% against 9.11% in November 2011 and 9.45% in December 2010.

DSM/SS/GN

Inflation moderation signalled as ongoing, with expectations of further easing and policy measures to consolidate improvement. The Finance Minister attributed a recent decline in year-on-year headline inflation mainly to lower inflation for primary articles including food, expressed confidence that moderation in inflation would continue into the coming months with headline inflation expected to ease by end-March 2012, and cautioned that disinflation in manufactured goods may be more gradual. The Minister placed these inflation developments alongside industrial production data as indicative of improving macroeconomic parameters in the second half of 2011-12, while noting marginal declines in manufactured goods and power-group inflation remain a concern and that policy correctives are expected to consolidate the trend.