The figures for WPI (Wholesale Price Index) for first week of February 2009 have just been published for India. Based on the internal model at Dawnay Day AV Analytics, we now predict the inflation for July-Sept 2009 quarter at minus 3% (-3%) or lower on yoy basis for India.
The implications of this prediction for monetary policy by Reserve Bank of India are quite significant.
Whether this trend results in a full scale transition from disinflation to deflation for India depends on how the US, UK, Germany, and Emerging Europe handle their banking crisis and how fast they nationalize their banks.
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