The price of predictions

Like economic growth, predicting inflation has become a tricky business. So at the Economic Editors Conference, Planning Commission Deputy Chairman Montek Singh Ahluwalia was reluctant to predict the inflation rate by the end of the year. Eventually, bowing to persistent pressure from journalists, he ventured to offer a figure of below eight per cent. But he was quick to add that his predictions for last year and the year before were both wrong. So if this year’s prediction proved wrong, he said, he would stop making forecasts — at least those related to wholesale price index-based inflation or food inflation. Will Ahluwalia be third-time lucky?

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