PMEAC to review economy in mid-Feb; may up inflation forecast

NEW DELHI: The Prime Minister's Economic Advisory Panel is likely to revise upwards inflation forecast for the end of this fiscal to 7 per cent when it reviews the country's macro economic situation in mid-February.

"The PMEAC would review the macro economic situation in Mid-February and is likely to revise upwards its fiscal-end inflation forecast from 6.5 per cent to about 7 per cent," an official told media.

While releasing the economic outlook for the current fiscal in July last year, the PMEAC had estimated inflation will come down to 6.5 per cent by the end of 2010-11.

However, PMEAC Chairman C Rangarajan later said that inflation was likely to come down to 5.5 per cent by fiscal-end, which was subsequently revised to six per cent and 6.5 per cent, respectively. More recently, he put the March-end inflation estimate at 7 per cent on "higher-than-expected" wholesale price rise.

"March-end we had originally thought, it would be around 6.5 per cent, but given the current trend, it could be anywhere between 6.5 per cent and seven per cent," Rangarajan had said. Besides, in its quarterly monetary policy on January 24, the RBI has also raised its fiscal-end inflation forecast to 7 per cent from the earlier estimate of 5.5 per cent.

The overall inflation for December, measured on the basis of wholesale prices, increased to 8.43 per cent in December, from 7.48 per cent in November. The rise in inflation is mainly due to increase in food prices.

Snapping the downward trend of two consecutive weeks, food inflation inched up marginally to 15.57 per cent for the period ended January 15, on account of escalating vegetable prices, particularly onions. Food inflation for the week ended January 8, was recorded at 15.52 per cent.