CMIE pegs inflation for this fiscal at 9.6%

"We expect average inflation would be 9.6 per cent during the current fiscal as against 4.7 per cent in the previous year," the Centre for Monitoring Indian Economy (CMIE) said in its latest report.

Forecasting a downslide in inflation, CMIE said "inflation will start coming down when Reserve Bank of India (RBI) will have released large amounts of liquidity in response to the global financial crisis and its fallout on local liquidity conditions."

After reaching a 12-year high at 12.9 per cent in the first week of August 2008, inflation, as measured by the changes in the Wholesale Price Index (WPI), has slowly and steadily dropped in subsequent weeks.

"In the second-half of October, it reached 10.7 per cent. The drop is expected to continue in the remaining weeks of the current fiscal year," the CMIE report said.

The think-tank attributed the softening in inflation to factors such as the decline in fuel group prices, lower inflation in basic metal group, comfortable supply of agricultural commodities and the rise in base from January 2008.

"From January 2008, WPI of mineral group had surged because of hike in iron, ore and coal prices,' the report said.