Moderating Inflation Gives Food For Harmless Fun

Double-digit food inflation: Current 38-month spell the longest in recorded history

Since [the early 1970s and between late 1970s to early 1980s], high food inflation episodes were relatively short-lived, with the longest one lasting 27 months in the early 1990s. Even in the severe drought conditions of 1987, the double-digit food inflation episode lasted just 18 months.

All of that pales in comparison with the latest spell of 38 months when inflation stayed above 10 per cent, despite a record 13 rate hikes by the Reserve Bank of India since March last year.

38 months - a long time.  But lots of people were concerned about it as this table from a July 2010 post shows:

A Friedman Unit  by any other name would amuse as much.

Inflation: Fixing The Base

Still talking about inflation, in today's papers Pranab Mukherjee predicts inflation will moderate by end-August:

Addressing a press conference here after a meeting of the Southern Chief Ministers, the Finance Minister said the assessment of inflation is dependent on what is taken as a base. The inflation during the year is about 5.5 per cent. While the food inflation was coming down, the recent fuel price hike has added to this.

Does Pranabda have an ace up his sleeve?  Looks like it, for close to the above article, we have this: New inflation index likely next month: DIPP Secretary.  

The Government is set to introduce a new inflation index, which would add around 250 more items, from next month.

“We are ready with the new index now. Most probably from next month we will start,” said Mr R P. Singh, Secretary, Department of Industrial Policy and Promotion (DIPP).

The present monthly inflation measurement based on the wholesale price index has 435 commodities but this figure would go up to 670 under the new index. The base year of the new index would also be changed from 1993-94 to 2004-05. The new index is expected to give a more realistic picture of the price rise and its impact on people.

By far the best way to fix inflation!  Will we see that inflation after all is not so high and that the impact on the people is minimal by August then? Can't wait to find out.

Talking Down Inflation!

Interesting timeline of pronouncements on inflation, from Business Line:

We can safely say that it is completely under control.  Nothing to worry!