Monday, October 18, 2010

Households see inflation at 12% by June

In a bid to reduce volatility in stock prices, a new system of trading is being introduced from Monday. BSE and NSE , the two premier stock exchanges in the country, will start a 15-minute pre-open session for the 50 stocks that comprise the nifty index from Monday.

The pre-open market, christened call auction session, will operate between 9 am and 9.15 am on both — the cash as well as the derivatives segments — of the two exchanges. The pre-session trading in these stocks is mainly aimed at reducing volatility in stock prices because of developments that took place after the close of trading the previous session.

The government may expect inflation to moderate to about 5.5% by March 2010, but a survey by the Reserve Bank of India has found that households expect it to rise to almost 12% by next June. 

According to the survey issued in the latest bulletin of RBI, households believe that prices of food, housing and services are going to be go up and fuel the rise in inflation. 

"The movement of the inflation expectations shows that the future inflation expectations are usually higher than the current inflation. In the current round of the survey (i.e., June 2010), the average rate of inflation expectations for... one year ahead (is) 11.9% ..., " it said. This is higher than 11 % measured in last survey by RBI during the previous survey in quarter ended March.

Read more: Households see inflation at 12% by June, finds Reserve Bank survey - The Times of India

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