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Inflation in India: an evil that must be fought

India's economy has been struggling during 2012 with high inflation and slowing growth. Despite this economic slowdown prices have kept on rising.The authorities must curb inflation which now stands at 7.20%.Inflation expectations for 2013 are at 0,1% in Switzerland and 2.20% in the EU area. In India the wholesale price index (WPI) is the main measure of inflation.The impact of high commodity prices explain at least partly the persistent high inflation. But the lack of deep economic reforms is undoubtely the main explanation of this poor performance. In these conditions it is not surprising that Indians import and buy so much gold to protect themselves from a creeping inflation.In the BRIC group India has the quickest rate in terms of price increase. Moreover the country's integration with the global trade has reached a high level and can also explain an inflation due to the import of raw materials like coal and oil for its energy needs. Finally some experts think that the present indian administration is more inclined to go for deficit financing that is inflationary in nature.Furthermore higher government debt around the world may lead to higher inflation expectations and therefore to higher actual inflation. Whatever the reason a high rate of inflation is more often than not a bad indicator of a country's economic development. It must be fought.

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