A surge in food prices unexpectedly pushed the annual change in India's wholesale price index into positive for the first time since late May. The WPI (Whole Sale Price Index) rose by an unexpected 0.12 percent in the year to Sept. 5, compared with the previous week's 0.12 percent fall.
The rate turned negative for the week ended June 6 for the first time since the new wholesale price index (WPI) series started in 1995. The inflation rate had also turned negative in 1977.
Negative inflation implies that the average wholesale price level was lower during a given week than it was in the corresponding week a year ago. It does not necessarily reflect retail prices.
The price indices for primary articles, manufacturing products and fuel, power, light and lubricants rose for the week ended Sep 5.
The index for primary articles rose 1.3 percent to 274.7 (provisional) from 271.2 (provisional) the week before. Similarly the index for manufactured products also rose 0.1 percent to 208.1 (provisional) from 207.9 (provisional).
The price index for fuel, power, light & lubricants also rose marginally to 343.4 (provisional) from 343.3 (provisional) for the previous week due to higher prices of bitumen (9 percent), furnace oil and light diesel oil (4 percent each) and aviation turbine fuel (2 percent). However, the price of naphtha declined 7 percent.
The food articles sub-index rose an annual 15.4 percent, up from the previous week's 14.8 percent rise, as a dry spell hit nearly half of India's districts, hurting summer crops and prompting the government to take steps to raise supplies.
High food prices pose a dilemma for the RBI, which can do little about price pressures caused by supply-side bottlenecks.
Also, the effect of soaring fuel and commodities prices a year ago is poised to recede in coming weeks, as the WPI peaked in the first two weeks of September 2008. If prices held steady between now and the end of October, inflation would still reach 3 percent.
On Tuesday, Reserve Bank of India (RBI) governor Duvvuri Subbarao said inflation was already 5.2 percent so far this fiscal year and it would climb further by the end of March. But he made it clear the RBI would not unwind its accommodative monetary policy until recovery in Asia's third largest economy was secured.
In its July policy review, the central bank left its key policy rate unchanged after cutting it by 425 basis points between October and April.
The economy grew 6.7 percent in 2008/09, slower than rates of 9 percent or more in the previous three years, and policy makers expect it to slow towards 6 percent in 2009/10 due to lower farm output.
Source:Times of India & Reuters
No comments:
Post a Comment