Good News On Inflation Front

October 2006 | Ratings Update

Our short-term political risk rating, which takes into account the trend in inflation (as a potential risk factor for public discontent), rose to 70.0 this month, from 69.0. August's 4.84% y-o-y inflation result was the lowest in 18 years, and around half the levels seen in early 2005. The biggest contributor to declining prices is the food portion of the consumer price index basket, which rose by just 2.6% y-o-y in August. Although prices may well tick up, as the food portion of the index tends to be volatile, we now think that there is a good chance year-end inflation

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