Inflation slides to 5.91%--

Inflation fell for the ninth consecutive week on Friday to a 10-month low of 5.91% for the week ended December 27, owing to cheaper food and manufactured items. It stood at 3.83% a year ago. The index of food articles group declined by 0.7% as prices of jowar fell by 5%, fruits and vegetables by 3%, eggs and bajra by 1% each. In case of manufactured goods, imported edible oil became cheaper by 1%, polyester fibre by 2% and newsprint by 1%. The index of fuel remained unchanged and also there was no movement in the prices of cement and iron and steel during the week. The inflation has been declining after it touched a peak of 12.91 per cent in August last year.(Sorce:TOI)

RBI was compelled to raise the repo rate to a seven-year high of 9 per cent. The RBI now expects the inflation rate to be significantly lower than its March-end target of 7 per cent, while most analysts expect it to be close to 2 per cent. The wholesale price index is more closely watched than the consumer price index, which is published monthly, because it covers a higher number of products and is released weekly.

Home Loan Dilemma-- now or later???

Everyone who's working or searching a job or a housewife, husband,Mom,Dad,Bro,Sis , I and who doesn't want to have a home and live a lovely life- a secured one.Until recession struck economy badly, selecting a home loan was child's play. This was because Floating rates  were a few percentage points below the fixed rates.This was an attracting offer for the borrowers.But now if you are looking for a new home? Get ready to sweat it out when you apply for a loan.Home loans are getting more and more difficult to come by as some of the biggest players in the market tighten their mortgage norms. 

Inflation--The spiraling inflation and rising property prices have plunged the prospective borrowers in a dilemma. Moreover it is seen that there is a continuous  increase in the interest rates on home loans.Today if you or anyone for that matter  wants to go for a home loan, you think twice that is it the right time or it would be preferrable to wait for another 2-3 months;as the fixed rates are currently high - to the tune of 13 to 14 percent.Inflation has added the remaining  fuel to fire. RBI recently increased the cash reserve ratio (CRR) and the repo rate by 0.5 percent. Leading banks were quick to pass on the burden of hike to borrowers .Banks are in consultations with the government and the Reserve Bank of India to revise eligibility criteria for disbursing home loans. Currently, the cap is calculated based on one’s capacity to pay the equated monthly instalment (EMI) and other criteria.

In recent times, banks and institutions have tightened norms for some industries like call centres, IT professionals and investment bankers. Chidambaram said housing is an important sector and a major driver of the economy. "Steel, cement, bricks, pipes, wires, electrical equipment, construction, labour everything depends on housing," he added.So we can expect for certain cuts in the interest rates and a review of the eligibility criteria can help many to turn their dreams into reality--- "My Home"

Inflation dives to nine-month low--

India's headline inflation fell to a nearly nine month low of 6.84 per cent mainly on account of cut in domestic fuel prices after nearly 20 per cent decline in the global crude oil prices and declining prices of vegetables, fruits, pulses and iron, steel items-- the lowest in nine months.A Rs 5 per litre cut in petrol prices and Rs 2 per litre reduction in diesel rate on December 6 helped bring down inflation.

At the same time, the government said it was seeking extra spending of about $9 billion for the current fiscal year to the end of March as part of a fiscal stimulus to lift economic growth and offset the impact of the global slowdown. 

Inflation, measured by wholesale price movement, dipped by 1.16 per cent for the week ended December 6 from the previous week, triggering demands from the industry for further cuts in key policy rates by the Reserve Bank.

Commenting on the decline, FICCI secretary general Amit Mitra said, "RBI should cut interest rate expeditiously and by a significant quantum. It must also ease availability of credit further."

Nosediving of inflation to 6.84 per cent coupled with falling oil prices is likely to trigger more lending rate cuts upto one per cent by Banks, economists said . Many state-owned banks and a few private sector banks had slashed their prime lending rates after RBI's monetary measures rate and finance minstry's calls for immediate rate reductions. However, if the decline in the inflation continues in this pace, that may pause policy hurdles by mid-next year.

200 million dollar note--WOW..!!

Inflation-wracked Zimbabwe plans to introduce a 200 million dollar note just days after a 100 million dollar note came into circulation.The 200 million dollar not will bring to 28 the number of notes put into circulation by the central bank this year alone, as the country struggles with the world's highest inflation rate of 231 million percent. 

The central bank introduced 100 million, 50 million and 10 million dollar notes while at the same time increasing withdrawal limits for individuals and companies. Cash  can now only be withdrawn once a week from banks, according to the latest measures by the central bank. Ordinary people can withdraw 100 million dollars a week while companies are permitted to withdraw 50 million dollars. This is strange and insecure as the cash has to be kept in houses or in wallets or in the corporate treasury.

Can you relate the rising of the prices of basic goods and services when the 100 million dollar note was introduced? The 100,000 banknote is worth only one US dollar on the widely-used parallel black market and is only half the amount needed to buy a loaf of bread. 

Ready for deflation...

The steep and completely unexpected decline in inflation rate to 8.98% should provide respite to policymakers. The sharp fall in inflation, triggered largely by the slump of commodities (metals and petroleum products) over the past month, is unlikely to reverse any time soon, given the recessionary condition. The slowing of China in particular will keep commodity prices low.  We may now be looking at inflation coming down to  5-5.5% by March 2009. That gives the government and RBI the room to use both more fiscal and monetary measures to prevent a slump in overall growth.   Now the money supply has declined to less than 20% from a level of nearly 23% a year ago. And the current situation demands reversal of measures that were appropriate when FIIs were pumping money into the markets and the rupee was appreciating.  While the need of the hour is to takes measures to rejuvenate growth, policymakers should not lose sight of some inflationary pressures that remain.Prices of food grains, vegetables and milk, which are still quite high, hurt the poor, particularly daily wage earners. Pure administrative bottlenecks are also responsible for food inflation,the governement must keep its control over the falling inflation considering the inconvenience suffered majorly by the poor.