Deflationary Trend Energising Market Conditions

March 16, 2015 15:17
Deflationary Trend Energising Market Conditions

Inflation levels based on the WPI (Wholesale Price Index) continued to be India’s happy news as it falls from -0.39% to -2.06%. Global crude oil prices still are on its weaker level, which is catalyzing the Indian Economy as we are much dependent on the imported fuels.

The rise in prices of food and allied products did not affected the economy. According to the data released by the commerce ministry fuel and power prices fell 14.72%, and food prices rose 7.74%. The government also revised the December WPI to -0.5% from 0.1% reported earlier.

Moody’s Investors Service in a report, predicted that crude oil prices likely to be continued as low in 2015. “Despite a 17% rebound in February to $59 per barrel, we continue to forecast that Brent oil prices will remain around $55 pb (per barrel) in 2015, $65 pb in 2016 and $72 pb in 2017,” the report said. 

The price of the Brent crude is at its six year low at $47 per barrel in January, the price of the Indian crude basket was at $54.56 on 13 March.

While the retail inflation based on the CPI (consumer price index) increased up to 5.37% from 5.19% of last month. However the RBI has to correlate its policy review as per the monetary policy framework signed between the government and RBI in February, which mandates the central bank to take steps to limit the retail inflation within 6% by January 2016.

In its bimonthly monetary policy review which is scheduled on 7th April, it has to address the impact of unseasonal rains in February and March. The deflatory trend helps Indian economy to taken stringent reforms to stabilize the market.


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