July 6, 2010

 Inflation in India and China is rising to new heights after Both Governments are finding it difficult to Tackle the problem effectively.
           India's food inflation rose  in June and reached double figure mark , India's food price index rose 16.90 per cent in the year to June 12, higher than the previous week's annual reading of 16.12 per cent, The fuel price index remained unchanged at 13.18 percent in the year to June 12.Recent hike in Petrol Price would certainly affect rise in inflation directly..No doubt that cost of living would rise.Recently The Reserve Bank of India (RBI) has raised rates twice,to curb on the inflation rise.
          Now the hope is on the Monsoon Gods ..If India receives it full Quota of rain scarcity of food grains and agricultural products would be removed and this will certainly reduce the steady rise in inflation.

                    In China ,the shares have come down to 15 month low - increasing concerns over China's economic Growth.Also is the rise in cost for living in China due to steady rise in Inflation.The Consumer Prices Index (CPI) increased at an annual rate of 3.1% in June - above the Chinese central bank's official target of 3%.More worryingly, producer price inflation - the cost of goods leaving the factory gate - rose to 7.1% in June.

                       China's recent decision to allow more flexibility in the exchange rate of the Chinese currency Yuan  should help slow inflation and reduce this steady rise.A rising yuan reduces the price of imports and rises demand for Chinese exports.But,the Chinese Government have only allowed the yuan to rise  gradually - the currency is up 0.9% against the dollar.

 Lets hope the two Asian Giants will come out of this Inflation Crisis as fast as possible.

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