India may slip into deflation by April: D&B

Press Trust of India / New Delhi March 15, 2009, 15:39 IST
India may go into deflation by the beginning of April this year due to weak consumption demand and a higher base effect, research firm Dun & Bradstreet said today.
"There will be negative inflation for a few weeks in the first quarter of next fiscal, driven largely by higher base effect but we do not expect a pronounced deflationary trend in the economy," Dun and Bradstreet Chief Operating Officer Kaushal Sampat told PTI.
Deflation is a general decline in prices, that is often caused by a reduction in the supply of money or credit.
The deflationary phase, wherein there is a decrease in general price level and demand conditions drop significantly are likely to last only for a few weeks as the recent fiscal as well as monetary measures of the government is likely to boost demand.
"Consumption demand is expected to receive a boost once the lagged effects of the aggressive policy responses by the government and the RBI start unfolding," Sampat added.
Inflation fell to more than six-year low of 2.43 per cent for the week ended February 28 mainly on account of fall in prices of manufactured products and some food items. The wholesale price index stood at 6.21 per cent during the corresponding week a year ago.