New Delhi, April 19 -- Economists often talk of 'inflationary expectations' and one may be left wondering what these mean. In essence, the argument goes that present inflation is not relevant as this has already been witnessed.

What is important is future inflation, which is why expectations of price levels matter.

Rising crude oil prices, for example, portend higher general inflation ahead. A possible El Niño weather phenomenon this year can influence inflation expectations for the second half of this year as there could be deficient monsoon rainfall, which could cause food prices to rise.

These expectations tend to feed decisions taken by consumers and producers, turning rising prices into a kind of self-fulfilling prophecy and ...