Deflation or Disinflation

Deflation is inflation below zero for a prolonged time. But how prolonged? Japan had inflation below zero for a decade so it is said to have deflation. In the indian context it is expected that the Q1 of 2010 would see zero inflation. Inflation is expected to rise after the quarter. This is just disinflation not deflation.

Is this good or bad? Inflation is Going to be below Zero for the first time in the history of Indian economy. In this time of slow down it should boost the demand, but as the key rates are well above the inflation figures the demand creation is abig doubt. with the essential commodity index still showing over 7% I doubt if the common man see the difference.

The good news is that with RBI set to reduce the ratees further by 50 or 100bps the demand might pick up. The domestic demand in India is enough to get the economy back on track.

Marketers around the globe are trying hard to sell, with the demand picking up marketers will be able to achieve the targets.