Archive for January 13th, 2014

Why is Recent Food Inflation in India so Persistent?

January 13, 2014

The recent reading (Dec-13) of CPI inflation has declined thanks to significant correction in food inflation. The CPI food index has declined from 145.7 in Nov-13 to 142.2 in Dec-13. The bewildering swings in food inflation remain a huge concern for policy making.  Despite correction in veggie prices last month food inflation remains 12% compared to 14.5% in Nov-13.

Though, this does not take away the fact that food inflation has remained highly persistent from 2010 onwards. The average CPI food inflation has been 11.11% from Jan-12 onwards compared to average CPI of 9.88%.

Deepak Mohanty of RBI has this speech on persistence of food inflation in India..

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Overstated pessimism over latin america

January 13, 2014

One has to be really careful saying such words over Latam economies. One never knows what is going on with them.

Augusto de la Torre, Eduardo Levy Yeyati and Samuel Pienknagura write this voxeu piece saying pessimism in Latam is overstated:

There is a wave of fashionable pessimism over the future growth of Latin America. This column distinguishes between two main types of concerns – related to the trend of the long-term growth, and to the cyclical vulnerabilities of the region. While the first type is partially justified, the second type is not because such concerns overlook two fundamental changes in Latin American economies. First, the de-dollarisation of financial contracts reduces the adverse effects of currency depreciations. Second, a more credible monetary policy was implemented with a substantial decline in the exchange rate pass-through to inflation.

Though there is one problem with this analysis. It looks at Latam as a group and not really country-wise barring tables. So just like Eurozone looks much better on the aggregate thanks to Germany, same is the case with Latam where Chile must be helping (not sureVenezul though)…

With individual Latam countries, one is never sure..

90 Udupi eateries shut shop in Mumbai in 2 years….

January 13, 2014

A simple ToI article with many economics lessons. It points how the Udupi restaurants in Mumbai are closing down.

The reasons for closure are manifold:

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