Inflation to hover at 4-5% by 2009 end: Montek

Planning Commission deputy chairman Montek Singh Ahluwalia said on Thursday that inflation would go up and hover between 4 and 5 per cent by the end of this year.

"We are in favour of modest inflation; we (will) end the year, as we have been saying, with inflation between four and five per cent," Ahluwalia said.

Asked about inflation going up marginally to (-)1.21 per cent for the week ended July 4 compared to (-)1.55 in the previous week, Ahluwalia said, "I have been saying consistently that temporarily inflation will be negative but it will go back to a positive level. Inflation should be small but positive . . . negative (inflation) . . . falling prices are bad for the economy."

"(Very high individual prices coming down) is ok, but for the price level as a whole (it) is not good. Inflation between four and five per cent is normal," he added.

About when inflation is expected to turn positive, he said, "Three weeks ago I said it would remain negative for several weeks, but I am not predicting when it is going to be positive."