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Rediff.com  » Business » Negative inflation not cause of concern: Montek

Negative inflation not cause of concern: Montek

Source: PTI
June 18, 2009 17:41 IST
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Inflation moving into negative territory is not a cause of concern, Planning Commission deputy chairman Montek Singh Ahluwalia said on Thursday.

"It is not a cause of concern whatsoever," he said while commenting on inflation, which turned negative -1.61 for the first time after more than 30 years.

He further said it was expected that 'inflation would appear negative for a little while".

Having touched a peak of 12.9 per cent in August last year, inflation turned negative in the first week of June declining by 1.6 per cent. Though inflation turned negative, the prices of food items like fruit and vegetables, cereals and oil have continued to move up.

"This (negative inflation) is not a matter of crisis rather this is course correction or normalisation. There is nothing to worry as this is happening because of the base effect," Planning Commission member Saumitra Chaudhuri said.

According to Chaudhuri, 'as prices had risen to very high level last year, the negative inflation is more of a statistical issue.'

Voicing out a similar view, Prime Minister's Economic Advisory Council chairman Suresh Tendulkar said that the negative inflation is a temporary phenomenon and is mainly due to base effect.

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