THE NATURE OF INDIA'S INFLATION RATE

NATURE OF INDIA’S INFLATION RATE

Inflation rates of the emerging economies as measured by CPI  have been shown in figure where India’s CPI is moving upward sharply from 2005 to 2010 and started to fall.But between 2008-2010,all the emerging economies like China,Brazil,Malaysia ,Russia and Thailand fell speedily and then started to increase.During 2005-2010,India stayed within the range of 5-15% and Russia’s average inflation is all time high and low cyclically.

India’s inflation rate ie consumer price index as measured by CPI-IW,CPI-AW and CPI-RW are shown as exstremely volatile during 1995-2010 and they are partly cyclical in nature .Between 2000-2010 , the rates are lying below 5% but between 2005-10 they crossed more than 10% .After financial crisis they fell down sharply and in 1998 the rates reached at top at 20%.

The ratio of growth rate of producers Price Index and wholesale price index has the cyclical behavior during 2005-2011 as observed from the data of multicountry like India, China ,Brazil,Malaysia,Russia and Thailand.During the financial crisis it stood top and then fell steeply and also rose sharly.Of them Russia’s rate is quite high during 2005-2011.

Thus, the nature of India’s inflation rate is not all different from other emerging economies. We should remind that the Euro area facing several crises but it has inflation rate ranging from 2-4% and in USA  the rate lies between 3-6% in last two decades.