

Inflation declines further...
The wholesale price index based inflation for the week ended January 2 has fallen to 5.24%, down from 5.91% in the previous week. As per a leading business daily, the government expects inflation to decline to 3% to 4% by the end of March this year. The RBI’s comfort level is 5%. Hence the case for another round of rate cuts by the RBI is rapidly building up.
The decline this week is due to lower prices in all three major commodity groups - primary articles, fuel and manufactured products. It may be noted that food inflation was increasing even as overall inflation was declining. However, it has come down this week, for the second time in a row. Hopefully, supermarkets and restaurants will now stop hiking their rates for a change!
On the global front The European Central Bank (ECB) lowered its key interest rate by 0.5% to 2% yesterday in an effort to avoid a deep recession. It is the fourth rate cut since last October. The ECB president has indicated that a further cut was likely if Europe did not show signs of a recovery by March. Recent economic data has shown that a number of countries in the 16-member Eurozone are already in recession, while others facing a severe economic downturn.
In a rare move, the world’s largest software company, Microsoft Corporation is contemplating significant layoffs due to the decline in computer sales. It is believed that the announcement could come as early as next week. If one of the largest and steadiest companies in the world is having a tough time in managing its expenses, the situation is unlikely to be much better in other industries.
The wholesale price index based inflation for the week ended January 2 has fallen to 5.24%, down from 5.91% in the previous week. As per a leading business daily, the government expects inflation to decline to 3% to 4% by the end of March this year. The RBI’s comfort level is 5%. Hence the case for another round of rate cuts by the RBI is rapidly building up.
The decline this week is due to lower prices in all three major commodity groups - primary articles, fuel and manufactured products. It may be noted that food inflation was increasing even as overall inflation was declining. However, it has come down this week, for the second time in a row. Hopefully, supermarkets and restaurants will now stop hiking their rates for a change!
On the global front The European Central Bank (ECB) lowered its key interest rate by 0.5% to 2% yesterday in an effort to avoid a deep recession. It is the fourth rate cut since last October. The ECB president has indicated that a further cut was likely if Europe did not show signs of a recovery by March. Recent economic data has shown that a number of countries in the 16-member Eurozone are already in recession, while others facing a severe economic downturn.
In a rare move, the world’s largest software company, Microsoft Corporation is contemplating significant layoffs due to the decline in computer sales. It is believed that the announcement could come as early as next week. If one of the largest and steadiest companies in the world is having a tough time in managing its expenses, the situation is unlikely to be much better in other industries.
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