It has certainly made an impact amongst the minds of young Indians, not to mention the hype and the hooplah that it is getting in some of those weird news channels. Yes, the inflation is sub zero. Is it time to prepare for the doom? My relative innocuous conscience tells me that it is nothing to worry about. We are indeed sub zero but it is nowhere near to be termed as deflation. We should be happy to be sticking our neck out around the term Negative Inflation. The primary reason being, we are not yet witnessing any drop in demand and that is not going to happen anytime soon. So, deflation is ruled out. The second reason being, the WPI calculated YOY has a significant base effect. The crude that was around 130 $ last year, is around 70 $ today. To top it, we have seen a price decline most other goods, at least in the Wholesale markets. The monsoon has started playing truant and if it does not make its appearance then we shall certainly have a drop in food grain production that would lead to a surge in inflation again. For all I know, the CPI is still around a comfortable 9 percent. That makes the case in point.
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