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Will negative inflation beep into deflation?

Created by : Babu Kandasamy, Sr. Associate, Yes Bank  | 03 29 2009 22:28:42 +0000
Industry : Equity Research/AnalyticsFunctional Area : India(Markets)
Keywords : deflation negative inflation
Activity:  208 views;  last activity : 07 06 2010 20:18:09 +0000

Inflation and deflation both are happening nowadays.

Will negative inflation beep into deflation?

  
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"Inflation reduces the real value of money over time, conversely, deflation increases the real value of money."
Deflation is a sustained decrease in the general price level of goods and services. Deflation occurs when the annual inflation rate falls below zero percent, resulting in an increase in the real value of money — a negative inflation rate.And moreover currently deflation is also linked with recessions and with the Great Depression.Which prevent monetary policy from stabilizing the economy because of a mechanism called the liquidity trap.
By Esha Johar, Risk Analyst, Irevna  05 12 2009 07:36:20 +0000
 
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correct...we should have some thought in the mind and ponder about it all else our mind would be a not for use item in our body..keep pondering about as many questions you can...inflation..deflation..dibeties..sugar..heart attack..etc etc..deflation happens when there is no demand for all item at one time.

is that possible in india we are sucha huge country with such huge population.and always growing..as many people as many opportunity to sell products..and how much a single manufactorer can manufacture so as to find it difficult to sell it in india..

if there is value for the product it will sell this is india.thanks for the topic it made me think and my mind was busy for some time.

 
By sandesh saboo, Research Associate/Analyst, saboo associates  05 12 2009 10:27:28 +0000
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According to government's chief statistician there is a possibility that India will face a period of deflation in the middle of 2009.Everywhere one looks, prices are falling. From airline tickets to cars, from household goods to clothes, and from property prices to stock prices, all are seeing declines.Deflation hurts the economy much more than inflation because consumers postpone expenditure, because they think prices will be cheaper going forward. This affects firms, who then scale back production and investment plans, leading to job losses, further affecting purchasing power and demand, which leads to a downward spiral in the economy.

But seeing the growth of the market from past few weeks and especially after results of the elections were announced,I believe that the economy is on a rebound and purchasing power of people will rise again and it may possible that the prices will not decline further so as to avoid deflation.
By Jyoti Rath, Sr. Associate, Barclays  | 05 20 2009 06:54:59 +0000
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currently we are in consolidation mode and once it over we will see fresh wave of decreasing prices and it will ultimately deflation will be peep in to scnerio
By Dushyant Hada, Territory Manager  | 05 10 2009 12:22:31 +0000
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As there is sharp fall in prices of inputs it is going into deflation.
By Babu Kandasamy, Sr. Associate, Yes Bank  | 03 29 2009 22:28:42 +0000
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Deflation is completely out of question till industry output contracts upto tha range of 5-7% and that has not been seen plausible up till now.
By Surender Singh, Associate, HDFC Bank  | 03 29 2009 22:30:18 +0000
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