The widespread improvement can also be evidenced from the fact that the year-on-year rate of decline has slowed in the CPI for all items excluding food and energy. Such a moderate rise in prices will change the expectations of the people – who were somewhat sceptical about the feasibility of overcoming deflation – and raise inflation expectations further.
If fifty per cent of households’ financial savings are taken away by the government sector, it has vital implications for ensuring stability in the financial markets because the demand for funds from the non-government productive sectors of the economy has to be met simultaneously.