Inflation in Indian vs. US economy
Inflation demon has created a big furore in every economy of the world. In India the food inflation index rose 18.32 percent in the year 2010 up to December 25. Fuel prices too climbed high to touch 11.63 percent. This is a steep rise over last week’s price when food inflation was 14.44 percent up and fuel prices was 11.63percent up on annualized basis.
Indian housewives are turning panicky over the unrelenting price jerk since their household budget has been run down mercilessly by the inflation demon. They have been shuddering to face the bigger demon in the next month to wipe their presence from the kitchen.
Microsolar analysis of the inflation demon brings solace for these panicky housewives. The demon is not likely to grow in size after 21st January 2011 though the thrust on food inflation will be felt for some more time. The rate of inflation is to be downsized from the peak that may touch 20%(Food Inflation) percentage or near this level. From June 2011 when the resistant factor will shift its thrust from the present position the inflation demon is likely to lose its strength drastically.This trend is likely to be set in other economies as well where rate of inflation had been going up rapidly
Inflation has different face in US economy. Inflation rate in here started ascending from May 2007 from the base of 3.94% in April to 5.6% in July, which happened to be the peak. 2009 has been the year of negative inflation rate and it touched the lowest -0.034% by December. From this bottom the rate of inflation has gone up in 2010 though it has remained mild only from the middle of the year. This is almost just opposite of what happened in Indian economy from 2008 March. (See the chart attached)
