Inflation to hover at 4-5% by end 2009: Montek

Planning Commission Deputy Chairman Montek Singh Ahluwalia today said that inflation would go up and hover between 4 and 5 per cent by the end of this year.     

"We are in favour of modest inflation; we (will) end the year, as we have been saying, with inflation between four and five per cent," Ahluwalia said.      

When asked about inflation going up marginally to (-)1.21 per cent for the week ended July 4 compared to (-)1.55 in the previous week, Ahluwalia said, "I have been saying consistently that temporarily inflation will be negative but it will go back to a positive level. Inflation should be small but positive ... Negative (inflation) ... Falling prices are bad for the economy."     

"(Very high individual prices coming down) is ok, but for the price level as a whole (it) is not good. Inflation between four and five per cent is normal," he added.     

About when inflation is expected to turn positive, he said, "Three weeks ago I said it would remain negative for several weeks, but I am not predicting when it is going to be positive."