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May 14, 2013

Inflation dips below 5%

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inflation in india
The headline inflation plunged below 5 % in April 2013. According to government data released on Tuesday, the wholesale price index (WPI)-based inflation was recorded at 4.89 per cent in April. The inflation was at 5.69 per cent in the month of March.

The inflation is below five per cent, for the first time the figures were seen below five after November 2009. The moderation in the inflation could prompt the apex bank to cut further key interest rates.

In economics, inflation is referred to rising prices and fall in the value of money (in exchange).

Recently, the Reserve Bank of India had cut the key interest rates following moderation in the inflation. A further cut would help the stock markets to gain more confidence.

The equity market in India has been seen strong as the BSE Sensex was zoomed to the highest of 20,000 mark, after many choppy sessions.

The inflow of the fund into the stock market by the foreign institutional investors (FIIs) was high in the first week of the May 2013. For the same period, the FIIs had poured Rs. 26,000 crore rupees into the Indian equity market.

The easing inflation could be a bit of relief for the consumers as they witnessed a moderate cut in the petrol price by the government of India.

Considering all the above cases, it could be projected the Indian economy has been on the track gain from the economic slowdown.

However, some negative forces like the uncertain political activities, border tension with China, devaluation of rupees in the international forex market and low industrial growth rate could pose threat to Indian economy and may derail it from the path of recovery.


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