Inflation to be high but could ease from mid-May

Economists fear the country is in for a period of high inflation even though it may start easing from the current level of 7.41 per cent to around 6.4 per cent from mid-May onwards. "There is a likelihood of inflation declining in about a month's time. But it will still be around the 6.4 per cent mark," Bank of Baroda Chief Economist Rupa Rege Nitsure told at Mumbai.

The economists peg inflation's yearly average (FY 09) at around 5.5 per cent, above the Reserve Bank's comfort level of 5 per cent but considerably lower than the present level.

"I see a cool down from May onwards. The Government's administrative measures should help pull down inflation by around 0.40 per cent. A cash reserve ratio (CRR) hike by the Reserve Bank would further help dampen inflation," Enam Securities Chief Economist Sachichidanand Shukla said.

"If supply-side constraints also show an improvement as expected, inflation could reduce to around 6.25 per cent by mid-June," Shukla said.

Edible oils are already showing signs of easing. Food supplies should improve and with recession gripping several economies in the world, commodity prices too could begin to cool, he said.

Technorati Tags: Finance