Inflation in India falls to 0%

[The Great One]

wow. Be careful, that low is actually a bad thing, a very, very bad thing, worse than high inflation rates.

Not with 8 percent interest rates.

 

[xyxmt]

Zero inflation would be called deflation which is very bad

Not with 8 percent interest rates.

That would have been accounted for when they calculated rate of inflation, dont you think. I am no economists but cost of borrowing is a part of equation

 

[The Great One]

Zero inflation would be called deflation which is very bad

That would have been accounted for when they calculated rate of inflation

Indeed. You are no economist.

 

[farhan_9909]

could the oil price be the reason behind the inflation decrease in developing countries especially South asian countries?

 

[xyxmt]

could the oil price be the reason behind the inflation decrease in developing countries especially South asian countries?

yes off course

 

[BuddhaPalm]

Now everybody will hoard money and India's economy will collapse again!

 

[Echo_419]

wow. Be careful, that low is actually a bad thing, a very, very bad thing, worse than high inflation rates.

Kya baat kar rahe ho

 

[asquare]

This is a one off reading based on a number of factors. CPI inflation will rise a bit in January to about 6%. So India is, by no means in a deflationary trap. In fact, don't expect a interest rate cut of more than one percent before March 2016. Relative to where we were a year ago, several factors (most of them global) have coincided create a macroeconomic sweet spot.

We only need to hope that Rajan has the sense to allow a steady rupee depreciation (particularly given current oil prices). The rupee at 70 to the dollar, CPI inflation around 5%, and interest rates around 6.5-7% will be where we want to end the next fiscal. Those conditions + major reforms are needed for double digit growth by 2017-18.

 

[Jungibaaz]

Kya baat kar rahe ho

Zero inflation is bad news, it sounds deceptively good, but zero inflation/deflation is a very bad thing. Look at Japan as an example of why that's bad. Also note how countries like the UK, and others aim to keep inflation between 2-3%, rather than 0. Just google some basic economic theory on inflation, causes and effects.

However as two posters noted above CPI is still healthy, and interest rates at their current level still allow you some control over the price level and the problem over the last month in this particular price index.

 

[xyxmt]

Indeed. You are no economist.

tell me the great one i dying to learn something new, interest rates go up to control inflation then why 8% on 0% inflation

 

[Echo_419]

Zero inflation is bad news, it sounds deceptively good, but zero inflation/deflation is a very bad thing. Look at Japan as an example of why that's bad. Also note how countries like the UK, and others aim to keep inflation between 2-3%, rather than 0. Just google some basic economic theory on inflation, causes and effects.

However as two posters noted above CPI is still healthy, and interest rates at their current level still allow you some control over the price level and the problem over the last month in this particular price index.

I have a feeling RBI is going to raise rates so inflation will be in a healthy state

 

[Dubious]

wow. Be careful, that low is actually a bad thing, a very, very bad thing, worse than high inflation rates.

Is it? I was just gonna congratulate them...you know with the gori buying tamatar and all

 

[Srinivas]

Is it? I was just gonna congratulate them...you know with the gori buying tamatar and all

Ladies will like this situation because vegetables and fruits will be cheaper.

Actually the prices went low because of reduction of oil prices.

 

[asquare]

tell me the great one i dying to learn something new, interest rates go up to control inflation then why 8% on 0% inflation

Interest rates were raised to 8% last year when inflation exceeded 10%. CPI inflation is expected to be around 6% in January. A .5% reduction in interest rate is expected by April (if CPI inflation does indeed stay below 6%). The RBI is following an inflation mandate (or so it appears from Rajan's statements). Therefore, being very cautious with rate cuts makes sense.

 

[ito]

Now everybody will hoard money and India's economy will collapse again!

kya bakwas hai