The official Wholesale Price Index for ‘All Commodities’ (Base: 2004-05 = 100) for the month August, 2012 rose by 1.1 percent to 166.6 (Provisional) from 164.8 (Provisional) for the previous month.
INFLATION
The annual rate of inflation, based on monthly WPI, stood at 7.55% (Provisional) for the month of August, 2012 (over August, 2011) as compared to 6.87% (Provisional) for the previous month and 9.78% during the corresponding month of the previous year. Build up inflation in the financial year so far was 3.48% compared to a build up of 3.61% in the corresponding period of the previous year.
The movement of the index for the various commodity groups is summarized below:-
PRIMARY ARTICLES (Weight 20.12%)
The index for this major group rose by 0.3 percent to 219.5 (Provisional) from 218.8 (Provisional) for the previous month. The groups and items for which the index showed variations during the month are as follows:-
The index for `Food Articles` group declined by 0.4 percent to 211.4 (Provisional) from 212.2 (Provisional) for the previous month due to lower prices of fruits & vegetables (5%), poultry chicken (4%), fish-marine (2%) and milk (1%). However, the prices of arhar (8%), ragi(7%), gram and urad (6% each), moong, coffee and wheat (5% each), bajra, condiments & spices and masur (4% each), egg, tea and fish-inland (3% each), jowar, maize and rice (2 % each) and mutton and barley (1% each) moved up.
The index for `Non-Food Articles` group rose by 3.8 percent to 206.8 (Provisional) from 199.2 (Provisional) for the previous month due to higher prices of castor seed (15%), raw silk (14%), gingelly seed (12%), coir fibre (11%), rape & mustard seed (9%), cotton seed and linseed (7% each), niger seed and flowers (6%), soyabean (5%), fodder, groundnut seed and sugarcane (4% each), guar seed, logs & timber and raw cotton (3% each), raw jute (2%) and sunflower (1%). However, the prices of raw rubber (6%), copra (coconut) and mesta (2% each) declined.
The index for `Minerals` group declined by 1.3 percent to 331.3 (Provisional) from 335.8 (Provisional) for the previous month due to lower prices of sillimanite (13%), copper ore (9%), magnesite (7%), zinc concentrate and crude petroleum (3% each), steatite (2%) andchromite (1%). However, the prices of phosphorite (23%), iron ore (4 %) and barytes (1%) moved up.
FUEL & POWER (Weight 14.91%)
The index for this major group rose by 3.1 percent to 181.0 (Provisional) from 175.5 (Provisional) for the previous month due to higher prices of electricity (agricultural) (23%), electricity (industry) (11%), electricity (domestic) (9 %), electricity (railway traction) (8%), light diesel oil (7%), electricity (commercial) and naphtha (6%each), aviation turbine fuel (5%), furnace oil (4%), kerosene (2%) and petrol (1%).
MANUFACTURED PRODUCTS (Weight 64.97%)
The index for this major group rose by 0.8 percent to 146.9 (Provisional) from 145.7 (Provisional) for the previous month. The groups and items for which the index showed variations during the month are as follows:-
The index for `Food Products` group rose by 3.0 percent to 164.5 (Provisional) from 159.7 (Provisional) for the previous month due to higher prices of sugar (8%), oil cakes and gur (6% each), gram powder (besan), sooji (rawa) and gingelly oil (5% each), wheat flour (atta),khandsari and cotton seed oil (4% each), tea dust (unblended) and maida (3% each), mustard & rapeseed oil, vanaspati and mixed spices (2% each) and gola (cattle feed), groundnut oil, soyabean oil, bakery products, processed prawn and ghee (1% each). However, the prices of tea leaf (unblended) (1%) declined.
The index for `Textiles` group rose by 0.2 percent to 130.4 (Provisional) from 130.1 (Provisional) for the previous month due to higher prices of man-made fibre, jute yarn and cotton fabric (1% each).
The index for `Wood & Wood Products` group rose by 0.3 percent to 169.6 (Provisional) from 169.1 (Provisional) for the previous month due to higher prices of processed wood (1%).
The index for `Paper & Paper Products` group rose by 0.5 percent to 135.2 (Provisional) from 134.5 (Provisional) for the previous month due to higher prices of paper cartons / boxes (6%), newspaper (2%) and paper rolls (1%). However, the prices of computer stationery (2%) and newsprint (1%) declined.
The index for `Leather & Leather Products` group rose by 0.4 percent to 134.2 (Provisional) from 133.7 (Provisional) for the previous month due to higher prices of leathers (1%).
The index for `Rubber & Plastic Products` group rose by 0.7 percent to 136.9 (Provisional) from 135.9 (Provisional) for the previous month due to higher prices of plastic products and rubber products (1% each).
The index for `Chemicals & Chemical Products` group rose by 0.6 percent to 143.2 (Provisional) from 142.3 (Provisional) for the previous month due to higher prices of di ammonium phosphate (3%), pigment & pigment intermediates and organic manure (2% each) and synthetic resin, paints, non-cyclic compound, basic organic chemicals, adhesive & gum, ammonium sulphate, basic inorganic chemicals, safety matches/ match box and antibiotics (1% each). However, the prices of rubber chemicals and distemper (2% each) and polymers (1%) declined.
The index for `Non-Metallic Mineral Products` group rose by 1.1 percent to 164.2 (Provisional) from 162.4 (Provisional) for the previous month due to higher prices of railway sleeper (3%), grey cement (2%) and white cement and polished granite (1% each). However, the prices of glass bottles & bottleware (1%) declined.
The index for `Basic Metals, Alloys & Metal Products` group rose by 0.1 percent to 166.6 (Provisional) from 166.4 (Provisional) for the previous month due to higher prices of gold & gold ornaments (3%), ferro chrome (2%) and nuts/bolts/screw/ washers, steel: pipes & tubes, ferro manganese, zinc and aluminium (1% each). However, the prices of sponge iron (3%), pencil ingots (2%) and wire rods, melting scrap, gp/gc sheets, pig iron, copper products (other than wire) and rounds (1% each) declined.
The index for `Machinery & Machine Tools` group rose by 0.2 percent to 128.1 (Provisional) from 127.9 (Provisional) for the previous month due to higher prices of conductor (6%), lamps, fans and material handling equipments (3% each), harvester, ups / stabilizer, fibre optic cable and electric switches (2% each) and insulators, electrical wires, electric switch gears, air conditioner & refrigerators, capacitors, thresher and plastic machinery (1 % each).
The index for `Transport, Equipment & Parts` group rose by 0.6 percent to 129.3 (Provisional) from 128.5 (Provisional) for the previous month due to higher prices of auto rickshaw / tempo / matador (3%), tractors (2%) and parts of ships/boats etc., bus / mini bus / truck and motor cycle / scooter / moped (1% each).
FINAL INDEX FOR THE MONTH OF JUNE , 2012 (BASE YEAR: 2004-05=100)
For the month of June, 2012, the final Wholesale Price Index for ‘All Commodities’ (Base: 2004-05=100) stood at 164.7as comparedto 164.2 (provisional) and annual rate of inflation based on final index stood at 7.58 percent as compared to 7.25 percent respectively as reported on 16.07.2012.
Showing posts with label Inflation. Show all posts
Showing posts with label Inflation. Show all posts
September 14, 2012
Diesel Price Increased by Rs 5 per litre; Subsidized Domestic LPG Cylinders restricted to 6 in a year
The Cabinet Committee on Political Affairs (CCPA) under the chairmanship of the Prime Minister to consider the disturbing situation arising out of projected massive under-recoveries of Rs. 1,87,127 crore for the financial year 2012-13 in the wake of high international crude oil prices and sharp depreciation of Indian rupee against US dollar took the following decisions to be implemented with effect from the midnight of 13/14 September 2012 :
a) Increase in price of diesel by Rs. 5 per litre excluding VAT. Out of this, Rs. 1.50 per litre is on account of increase in Excise Duty. The balance increase of Rs. 3.50 per litre will reduce the under-recovery of OMCs by about Rs. 15,000 crore for the remaining part of the current financial year. The under-recovery on sale of diesel during 2012-13, even after this price hike, is estimated to be above Rs. 1,03,000 crore. The revised RSP of diesel in Delhi will be approximately Rs 47 per litre. Further, branded diesel will be sold at the market rate.
b) No increase in the price of petrol, although the current under-recovery on petrol is about Rs 6 per litre. The consequent loss to the OMCs will be offset through reduction in excise duty on petrol by Rs 5.30 per litre.
c) Restrict the supply of subsidized LPG cylinders to each consumer to 6cylinders (of 14.2 Kg) per annum. This will help in reducing the under-recovery by about Rs. 5,300 crore for the remaining part of the financial year. The under-recovery on sale of Domestic LPG during 2012-13, even after this measure, is estimated to be above Rs. 32,000 crore. Any number of cylinders will be available over and above the cap of 6 cylinders at market rate. The number of subsidized LPG cylinders available to each consumer in the remaining part of the current financial year will be 3 cylinders. While subsidized cylinders will continue to be available at Rs. 399 per cylinder (at Delhi), the market rate of LPG cylinders at non subsidized rates will be notified by the OMCs on monthly basis.
d) No increase in the price of PDS Kerosene which is currently Rs. 14.83 per litre (at Delhi). The under-recovery of the OMCs on sale of Kerosene during 2012-13 will continue to be about Rs.32,000 crore.
It may be recalled that the Department Related Parliamentary Standing Committee on Petroleum & Natural Gas (which has members from all Political Parties) made recommendation on capping of subsidized LPG cylinders to 6 per annum.
The effect of capping supply of subsidized LPG cylinders at six per annum will lead to saving of subsidy on one third of the total LPG cylinders. Two third of the total cylinders will still be supplied at subsidized rate. About 44% of the total Domestic LPG consumers, who consume 6 cylinders or less per annum, will not be affected by this decision. Capping of cylinders will also lead to reduction in misuse/diversion of subsidized cylinders.
The above decisions will reduce the under-recovery of OMCs by about Rs. 20,300 crore and the under-recovery for 2012-13 will be about Rs. 1,67,000 crore which is more than the under-recovery of Rs. 1,38,541 crore incurred by OMCs during 2011-12.
October 13, 2011
Flood inflation slips to 9.32%
Food inflation eased marginally for the week ended October 1 but stayed above 9 per cent for the third week in a row, as prices of vegetables, fruits and milk remained expensive, pinching the common man.
Data released today revealed that food inflation as measured by the Wholesale Price Index (WPI) stood at 9.32 per cent for the week ended October 1. It was 9.41 per cent in the previous week.
As food prices remained high, Finance Minister Pranab Mukherjee said the weekly decline in food inflation numbers is yet to translate into a trend.
"There has been a marginal decline... We require indication for a longer period of time," he told reporters.
The WPI revealed that vegetables became dearer by 13.01 per cent year-on-year, while fruits and milk were up 12.19 per cent and 10.35 per cent, respectively.
Protein-based items like eggs, meat and fish also became 9.92 per cent dearer on an annual basis. Cereals turned more expensive by 5.41 per cent, rice by 5.86 per cent and pulses by 6.87 per cent annually.
On the marginal decline in weekly food inflation, experts said that though there has been some fall in prices of wheat and onions, the drop in WPI is mainly due to high base effect -- inflation in the same period last year was over 17 per cent.
Onion prices declined by 10.15 per cent on an annual basis and wheat by 0.24 per cent.
However, the 'Fuel and power' inflation went up to 15.10 per cent week-on-week against 14.69 per cent due to the increased petrol prices. Oil marketing companies had increased petrol prices in mid-September.
Data released today revealed that food inflation as measured by the Wholesale Price Index (WPI) stood at 9.32 per cent for the week ended October 1. It was 9.41 per cent in the previous week.
As food prices remained high, Finance Minister Pranab Mukherjee said the weekly decline in food inflation numbers is yet to translate into a trend.
"There has been a marginal decline... We require indication for a longer period of time," he told reporters.
The WPI revealed that vegetables became dearer by 13.01 per cent year-on-year, while fruits and milk were up 12.19 per cent and 10.35 per cent, respectively.
Protein-based items like eggs, meat and fish also became 9.92 per cent dearer on an annual basis. Cereals turned more expensive by 5.41 per cent, rice by 5.86 per cent and pulses by 6.87 per cent annually.
On the marginal decline in weekly food inflation, experts said that though there has been some fall in prices of wheat and onions, the drop in WPI is mainly due to high base effect -- inflation in the same period last year was over 17 per cent.
Onion prices declined by 10.15 per cent on an annual basis and wheat by 0.24 per cent.
However, the 'Fuel and power' inflation went up to 15.10 per cent week-on-week against 14.69 per cent due to the increased petrol prices. Oil marketing companies had increased petrol prices in mid-September.
October 7, 2011
Food Inflation rises to 9.41%
Food inflation, as measured by Wholesale Price Index (WPI), stood at 9.13% in the previous week. It was 16.88% in the corresponding week of 2010.
As per data from the ministry of commerce, vegetables became dearer by 14.88% year-on-year during the week under review, while potatoes and onions became more expensive by 9.34% and 10.58%, respectively.
Finance minister Pranab Mukherjee on Friday expressed concern over costlier vegetables, fruits and milk pushing up food inflation to 9.41% for the week ended September 24, and said he has been in constant touch with the RBI on how to rein in the rate of price rise.
Fruit prices went up by 11.72%, milk by 10.35% and eggs, meat and fish by 10.33%. Cereals became dearer by 4.57% and pulses were up 7.54% on an annual basis during the seven-day period.
Headline inflation, which factors in manufactured items, fuel and non-food primary items, in addition to food commodities, stood at a 13-month high of 9.78% in August.
Overall, inflation in primary articles stood at 10.84% during the week under review, compared to 11.43% in the previous week.
Inflation in non-food articles, which comprise fibres, oil seeds and minerals, stood at 10.77% for the week ended September 24, as against 12.89% in the previous week. Fuel and power inflation remained flat at 14.69%, the same as in the previous week.
"Inflation is definitely a matter of concern. We shall have to see how to bring it down to moderate level," Mukherjee told reporters in New Delhi.
"Given the good monsoon, we were expecting some moderation in the rate of price rise. But it seems not to be happening and there is particular pressure on vegetables and fruits," Crisil Chief Economist D K Joshi said.
He said the government should address issues related to storage and cold chain facilities to reduce supply constraints. Joshi said the pressure on RBI continues to remain.
"We are definitely moving toward the end of rate hike cycle. However, there might be one last round of increase in interest rates later this month, as headline inflation remains stubbornly high," he said.
The Reserve Bank has already hiked policy rates 12 times since March, 2010, to tame demand and curb inflation.
As per data from the ministry of commerce, vegetables became dearer by 14.88% year-on-year during the week under review, while potatoes and onions became more expensive by 9.34% and 10.58%, respectively.
Finance minister Pranab Mukherjee on Friday expressed concern over costlier vegetables, fruits and milk pushing up food inflation to 9.41% for the week ended September 24, and said he has been in constant touch with the RBI on how to rein in the rate of price rise.
Fruit prices went up by 11.72%, milk by 10.35% and eggs, meat and fish by 10.33%. Cereals became dearer by 4.57% and pulses were up 7.54% on an annual basis during the seven-day period.
Headline inflation, which factors in manufactured items, fuel and non-food primary items, in addition to food commodities, stood at a 13-month high of 9.78% in August.
Overall, inflation in primary articles stood at 10.84% during the week under review, compared to 11.43% in the previous week.
Inflation in non-food articles, which comprise fibres, oil seeds and minerals, stood at 10.77% for the week ended September 24, as against 12.89% in the previous week. Fuel and power inflation remained flat at 14.69%, the same as in the previous week.
"Inflation is definitely a matter of concern. We shall have to see how to bring it down to moderate level," Mukherjee told reporters in New Delhi.
"Given the good monsoon, we were expecting some moderation in the rate of price rise. But it seems not to be happening and there is particular pressure on vegetables and fruits," Crisil Chief Economist D K Joshi said.
He said the government should address issues related to storage and cold chain facilities to reduce supply constraints. Joshi said the pressure on RBI continues to remain.
"We are definitely moving toward the end of rate hike cycle. However, there might be one last round of increase in interest rates later this month, as headline inflation remains stubbornly high," he said.
The Reserve Bank has already hiked policy rates 12 times since March, 2010, to tame demand and curb inflation.
January 6, 2011
Food inflation soars to 18.32%
Food inflation shot up to nearly a year's high of 18.32 per cent on December 25 due to a spurt in vegetables, onion and milk prices even as the Finance Ministry's pointman expressed helplessness, saying prices are not "fully" within the control of the government.
While economists felt that the soaring food prices would exert pressure on the government and RBI to intervene, Chief Economic Adviser in Finance Ministry Kaushik Basu said he agreed with Home Minister P Chidambaram's remarks yesterday that the government did not have full control over prices.
The wholesale food inflation jumped by 3.88 percentage points from 14.44 per cent in the previous week ending December 18, 2010 taking government by surprise.
A huge increase of over 82 per cent in onion prices and 58.85 per cent in vegetables led to the overall increase in food inflation.
After declining for a brief period, onion prices have started rising again and may go up further following Pakistan banning onion exports through land route of Wagha border.
The other items that contributed to price rise were egg, meat and fish (up 20.83 per cent), fruits (19.99 per cent) and milk (19.59 per cent) Food inflation in the corresponding week last year was 19.90 per cent
Expressing helplessness, Basu said,"I mean this is a huge country in terms of population and land area. It is an utter mistake to think that it is fully within the control of the government to move prices of food up and down.
"Government is just an enabling body, there are little local bodies taking decisions, there are private players taking decisions, farmers taking decisions . Government can give signals, can intervene strategically to keep the situation as much under control as possible,"Basu said.
Indicating that the government was taken by surprise, he said while hike in food inflation was likely, it was not expected to the extent of over 18 per cent.
Basu echoed Chidambaram who yesterday had said,". Nor am I sure whether we have at our hand all the tools to control inflation. Some say we do, some say we don't (have tools to check price rise). At least in case of food inflation, I have not heard anyone arguing convincingly that we have all the tools to control food inflation."
Expressing concern, Finance Minister Pranab Mukherjee said,"These are weekly (figures). Let us wait for monthly figures. These are weekly variations, but is a matter of concern".
Having raised the key interest rates for six times in 2010, the RBI is expected to again hike them in its next policy review on January 25 to cool down inflation.-PTI
While economists felt that the soaring food prices would exert pressure on the government and RBI to intervene, Chief Economic Adviser in Finance Ministry Kaushik Basu said he agreed with Home Minister P Chidambaram's remarks yesterday that the government did not have full control over prices.
The wholesale food inflation jumped by 3.88 percentage points from 14.44 per cent in the previous week ending December 18, 2010 taking government by surprise.
A huge increase of over 82 per cent in onion prices and 58.85 per cent in vegetables led to the overall increase in food inflation.
After declining for a brief period, onion prices have started rising again and may go up further following Pakistan banning onion exports through land route of Wagha border.
The other items that contributed to price rise were egg, meat and fish (up 20.83 per cent), fruits (19.99 per cent) and milk (19.59 per cent) Food inflation in the corresponding week last year was 19.90 per cent
Expressing helplessness, Basu said,"I mean this is a huge country in terms of population and land area. It is an utter mistake to think that it is fully within the control of the government to move prices of food up and down.
"Government is just an enabling body, there are little local bodies taking decisions, there are private players taking decisions, farmers taking decisions . Government can give signals, can intervene strategically to keep the situation as much under control as possible,"Basu said.
Indicating that the government was taken by surprise, he said while hike in food inflation was likely, it was not expected to the extent of over 18 per cent.
Basu echoed Chidambaram who yesterday had said,". Nor am I sure whether we have at our hand all the tools to control inflation. Some say we do, some say we don't (have tools to check price rise). At least in case of food inflation, I have not heard anyone arguing convincingly that we have all the tools to control food inflation."
Expressing concern, Finance Minister Pranab Mukherjee said,"These are weekly (figures). Let us wait for monthly figures. These are weekly variations, but is a matter of concern".
Having raised the key interest rates for six times in 2010, the RBI is expected to again hike them in its next policy review on January 25 to cool down inflation.-PTI
January 5, 2011
Inflation to come down to 6-6.5 percent by March-end
Prime Minister's economic panel today said inflation, under acute pressure from certain food items, is likely to come down to 7 per cent for December - data for which is yet to be released -and decline further to 6-6.5 per cent by the end of this fiscal.
Besides, the panel said that RBI action on whether to further tighten policy rates to tame inflation would depend on price behaviour, especially of food items, in the weeks following December 18, 2010. The Reserve Bank is slated to review monetary policy later this month.
Prime Minister's Economic Advisory Council chairman C Rangarajan told reporters here that inflation rate could be considered comfortable only when it comes down to 4 per cent.
"We have always thought that inflation rate should remain close to 4 per cent. Therefore, I would regard any inflation above that level as uncomfortable.Inflation is likely to be around 7 per cent by December end and between 6 and 6.5 per cent by March end,"Rangarajan said on the sidelines of Skoch summit.
He said the rate hike by the RBI will depend on the price behaviour during December and January.
"We still have three weeks to go. If the inflation rate comes down significantly, then there may not be any need for action but on the other hand, if inflation remains sticky then action will be required,"Rangarajan said.
Though overall inflation moderated to 7.75 per cent in November from 8.58 per cent in October, food inflation has increased rapidly in the first half of December.
From 8.69 per cent during the week ended November 27, food inflation rose to 9.46 per cent for the week ended December 4. It rose further to 12.13 per cent in the following week, and shot up to 14.44 per cent for the week ending December 18.
High onion prices, coupled with that of milk, were blamed for high food inflation
The Reserve Bank last year raised policy rates six times to rein in inflation. However, in its mid-quarterly review in December, RBI refrained from raising these rates, since the system was facing cash crunch.
It, in fact, announced measures to inject Rs 48,000 crore into the system.
RBI, however, cautioned that its measures should not be interpreted as reversal of tight monetary stance, since inflation still continues to be major concern.
On cash crunch, Rangarajan said, the liquidity situation will improve in this quarter, because of expected rise in government expenditure.
The RBI has blamed the government's high cash balance for creating liquidity shortage in the system.
While the Government got additional Rs 70,000 crore from the sale of spectrum for high speed mobile and broadband services over the budget estimates, it has not been spending commensurately.-PTI
Besides, the panel said that RBI action on whether to further tighten policy rates to tame inflation would depend on price behaviour, especially of food items, in the weeks following December 18, 2010. The Reserve Bank is slated to review monetary policy later this month.
Prime Minister's Economic Advisory Council chairman C Rangarajan told reporters here that inflation rate could be considered comfortable only when it comes down to 4 per cent.
"We have always thought that inflation rate should remain close to 4 per cent. Therefore, I would regard any inflation above that level as uncomfortable.Inflation is likely to be around 7 per cent by December end and between 6 and 6.5 per cent by March end,"Rangarajan said on the sidelines of Skoch summit.
He said the rate hike by the RBI will depend on the price behaviour during December and January.
"We still have three weeks to go. If the inflation rate comes down significantly, then there may not be any need for action but on the other hand, if inflation remains sticky then action will be required,"Rangarajan said.
Though overall inflation moderated to 7.75 per cent in November from 8.58 per cent in October, food inflation has increased rapidly in the first half of December.
From 8.69 per cent during the week ended November 27, food inflation rose to 9.46 per cent for the week ended December 4. It rose further to 12.13 per cent in the following week, and shot up to 14.44 per cent for the week ending December 18.
High onion prices, coupled with that of milk, were blamed for high food inflation
The Reserve Bank last year raised policy rates six times to rein in inflation. However, in its mid-quarterly review in December, RBI refrained from raising these rates, since the system was facing cash crunch.
It, in fact, announced measures to inject Rs 48,000 crore into the system.
RBI, however, cautioned that its measures should not be interpreted as reversal of tight monetary stance, since inflation still continues to be major concern.
On cash crunch, Rangarajan said, the liquidity situation will improve in this quarter, because of expected rise in government expenditure.
The RBI has blamed the government's high cash balance for creating liquidity shortage in the system.
While the Government got additional Rs 70,000 crore from the sale of spectrum for high speed mobile and broadband services over the budget estimates, it has not been spending commensurately.-PTI
September 17, 2009
Indian Inflation returns to postive zone
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
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
August 7, 2009
Inlfation still in negative zone
Government data showed on Thursday that the annual rate of inflation for all commodities stayed negative for the eighth straight week, but prices of food items continued to surge.
The annual Wholesale Price Index-based inflation declined 1.58 per cent in the week to July 25 after falling 1.54 per cent on an annual basis in the previous week. The year-on-year inflation rate was recorded at 12.53 per cent during the corresponding week of the previous year.
The official WPI for ‘All Commodities’ for the latest reported week rose by 0.04 per cent to 236.9 points from 236.8 points for the previous week. On a disaggregated basis, the primary articles group index rose 0.4 per cent as the index for ‘food articles’ group rose by 0.8 per cent due to higher inflation in items such as fish-marine (eight per cent), arhar (four per cent), urad ( two per cent) and fruits and vegetables, moong, mutton, wheat, masoor and condiments and spices (one per cent each).
However, the prices of eggs (two per cent) declined.
The index for ‘non-food articles’ group declined by 0.4 per cent due to lower inflation in raw wool (11 per cent), soyabean (five per cent) and niger seed (one per cent).
Raw silk (four per cent) and raw rubber (one per cent) moved up. The fuel and power index remained unchanged at its previous week’s level of 338.2 points.
The manufactured products group index declined by 0.1 per cent as the index for ‘food products’ group declined by 0.3 per cent due to lower inflation in oil cakes (three per cent) and imported edible oil (one per cent).
However, the prices of cotton seed oil, groundnut oil and sugar (one per cent each) moved up. The index for ‘textiles’ group rose by 0.1 per cent due to higher prices of cotton yarn-cones (four per cent) and cotton yarn-hanks (one per cent).
The prices of synthetic yarn and hessian cloth (four per cent each) and texturised yarn and polyester staple fibre (three per cent each) declined.
The index for ‘paper and paper products’ group declined by 0.2 per cent due to lower prices of newsprint and printing paper white (one per cent each).
The index for ‘basic metals alloys and metal products’ group rose marginally due to higher prices of zinc ingots (three per cent) and steel ingots, zinc and lead ingots (two per cent each).
For the week ended May 30, the final WPI for ‘All Commodities’ stood at 234.4 points compared to 232.6 points and annual rate of inflation based on final index, calculated on point to point basis, stood at 0.90 per cent as compared to the provisional estimate of 0.13 per cent points.
The annual Wholesale Price Index-based inflation declined 1.58 per cent in the week to July 25 after falling 1.54 per cent on an annual basis in the previous week. The year-on-year inflation rate was recorded at 12.53 per cent during the corresponding week of the previous year.
The official WPI for ‘All Commodities’ for the latest reported week rose by 0.04 per cent to 236.9 points from 236.8 points for the previous week. On a disaggregated basis, the primary articles group index rose 0.4 per cent as the index for ‘food articles’ group rose by 0.8 per cent due to higher inflation in items such as fish-marine (eight per cent), arhar (four per cent), urad ( two per cent) and fruits and vegetables, moong, mutton, wheat, masoor and condiments and spices (one per cent each).
However, the prices of eggs (two per cent) declined.
The index for ‘non-food articles’ group declined by 0.4 per cent due to lower inflation in raw wool (11 per cent), soyabean (five per cent) and niger seed (one per cent).
Raw silk (four per cent) and raw rubber (one per cent) moved up. The fuel and power index remained unchanged at its previous week’s level of 338.2 points.
The manufactured products group index declined by 0.1 per cent as the index for ‘food products’ group declined by 0.3 per cent due to lower inflation in oil cakes (three per cent) and imported edible oil (one per cent).
However, the prices of cotton seed oil, groundnut oil and sugar (one per cent each) moved up. The index for ‘textiles’ group rose by 0.1 per cent due to higher prices of cotton yarn-cones (four per cent) and cotton yarn-hanks (one per cent).
The prices of synthetic yarn and hessian cloth (four per cent each) and texturised yarn and polyester staple fibre (three per cent each) declined.
The index for ‘paper and paper products’ group declined by 0.2 per cent due to lower prices of newsprint and printing paper white (one per cent each).
The index for ‘basic metals alloys and metal products’ group rose marginally due to higher prices of zinc ingots (three per cent) and steel ingots, zinc and lead ingots (two per cent each).
For the week ended May 30, the final WPI for ‘All Commodities’ stood at 234.4 points compared to 232.6 points and annual rate of inflation based on final index, calculated on point to point basis, stood at 0.90 per cent as compared to the provisional estimate of 0.13 per cent points.
September 8, 2008
Government, Inflation and Farmers
The recent rise in inflation figures to a record high had made government and the central bank to come out with several policies (fiscal and monetary) to contain the rising inflation. Several commodities were banned from trading in futures trading like, potato, chana, rubber and soya refined oil. Previously, the government had also banned many other commodities like wheat, turmeric and so on. It had a notion that futures trading in agricultural commodities lead to a rise in prices in the spot market and thus, rise in inflation. Though, the committee set up by the government to study this notion (Abhijit Sen Committee) said that it didn’t found any conclusive evidence to prove that trading in futures market lead to rise in the prices of the commodities in the spot market and vice versa. Still, government continued with the ban of certain commodities.
Often, inflation has been projected as a bad for a growing economy. But, a steady and healthy rise in inflation is a must for the fruits of economic development to reach every quarter of the population. There are large sections of people who could benefit from the rising inflation. But, the government ensures that that does not happen. To appease a certain section of population, it sacrifices the benefits that could be received by other section. Whenever inflation figure moves up, government bans export of several food items like wheat and rice or announces some policies that badly affect farmers. It never allows its farmers to benefit from the rising prices. Indian farmers never think of producing good crop and sell it outside to gain more money. They are never allowed the opportunity to cash in. The government primarily does this to appease the urban population and ensure that in the election the ruling party wins by securing more votes from this population. It is irony that more than 60 or 70 per cent of India stay in villages and most of them are engaged in farming activities.
There is Minimum Support Price (MSP) by which a government says that it will buy their produce at a price that is either at the MSP or at a higher price determined by market forces. But, if we look at the past incidents, we will find that it never allows market participants to cash in. There are several blockades like railways refusing to allow them to transport their stocks and so on. Moreover, the MSP is only for big farmers having large produce owing to large lands. In India, barring a few per cent of farmers, others have relatively very small amount of produce. These farmers either sell their produce to an agent or in a market in nearby city. Apart from this, there are huge taxes on export of certain goods so that the farmers sell it in the domestic market just to keep inflation under control. The recent policies of government in certain agri -sector show how government is anti-farmer. It is high time for the government to change its agri-policies. It should learn from global scenario and allow farmers to produce more and find the market for that produce.
The government has also announced a debt waiver to a tune of Rs.70,000 crore for the farmers. But, people are yet to find out what happened to that waiver. The fact is that farmers hardly get the benefit of such waivers and when they get an opportunity to sell their produce at a higher price, government intervenes in the name of inflation. Others enjoy the real benefit. If we look at the farm loans, it presents a dismal picture. Presently, it is mandatory for the domestic scheduled commercial banks, expect regional rural banks (RRB) to allocate 18 per cent of their total loans and advances as well as non-SLR investments towards agriculture sector. Advances to the agriculture sector can be in the form of direct finance or indirect finance. Indirect finance is limited to a maximum of 25 per cent of the specified 18 per cent, i.e. 4.5 per cent of total loans and advances for agriculture sector. So, banks are not suppose to increase their indirect agriculture lending beyond the maximum 25 per cent of their total agriculture advances as priority sector advance. In reality the picture is different. While the public sector banks more or less remain within the prescribed limit, the private sector banks most often are found to breach the maximum 25 per cent as indirect finance. What this means is that poor farmers who genuinely need funds for their seeds and other agriculture expenses are denied loans. Government needs to ensure that all the scheduled commercial banks in India, both public and private do their needful so that these farmers who are the backbone of our country are able to get loans whenever they require. The huge success of micro-finance institutions in different parts of India proves that genuine farmers need genuine access to credit.
There had been a decline in India’s GDP growth for the first quarter in this fiscal year and the projections from various quarters too, is bad. So, government should make sure that at least agriculture sector is not affected by ensuring that farmers get cheap loans on time, making fruits of development reach them, and allowing farmers to cash in with the rising prices. Rising prices can act as motivational factors for increasing acreage and yields.
Often, inflation has been projected as a bad for a growing economy. But, a steady and healthy rise in inflation is a must for the fruits of economic development to reach every quarter of the population. There are large sections of people who could benefit from the rising inflation. But, the government ensures that that does not happen. To appease a certain section of population, it sacrifices the benefits that could be received by other section. Whenever inflation figure moves up, government bans export of several food items like wheat and rice or announces some policies that badly affect farmers. It never allows its farmers to benefit from the rising prices. Indian farmers never think of producing good crop and sell it outside to gain more money. They are never allowed the opportunity to cash in. The government primarily does this to appease the urban population and ensure that in the election the ruling party wins by securing more votes from this population. It is irony that more than 60 or 70 per cent of India stay in villages and most of them are engaged in farming activities.
There is Minimum Support Price (MSP) by which a government says that it will buy their produce at a price that is either at the MSP or at a higher price determined by market forces. But, if we look at the past incidents, we will find that it never allows market participants to cash in. There are several blockades like railways refusing to allow them to transport their stocks and so on. Moreover, the MSP is only for big farmers having large produce owing to large lands. In India, barring a few per cent of farmers, others have relatively very small amount of produce. These farmers either sell their produce to an agent or in a market in nearby city. Apart from this, there are huge taxes on export of certain goods so that the farmers sell it in the domestic market just to keep inflation under control. The recent policies of government in certain agri -sector show how government is anti-farmer. It is high time for the government to change its agri-policies. It should learn from global scenario and allow farmers to produce more and find the market for that produce.
The government has also announced a debt waiver to a tune of Rs.70,000 crore for the farmers. But, people are yet to find out what happened to that waiver. The fact is that farmers hardly get the benefit of such waivers and when they get an opportunity to sell their produce at a higher price, government intervenes in the name of inflation. Others enjoy the real benefit. If we look at the farm loans, it presents a dismal picture. Presently, it is mandatory for the domestic scheduled commercial banks, expect regional rural banks (RRB) to allocate 18 per cent of their total loans and advances as well as non-SLR investments towards agriculture sector. Advances to the agriculture sector can be in the form of direct finance or indirect finance. Indirect finance is limited to a maximum of 25 per cent of the specified 18 per cent, i.e. 4.5 per cent of total loans and advances for agriculture sector. So, banks are not suppose to increase their indirect agriculture lending beyond the maximum 25 per cent of their total agriculture advances as priority sector advance. In reality the picture is different. While the public sector banks more or less remain within the prescribed limit, the private sector banks most often are found to breach the maximum 25 per cent as indirect finance. What this means is that poor farmers who genuinely need funds for their seeds and other agriculture expenses are denied loans. Government needs to ensure that all the scheduled commercial banks in India, both public and private do their needful so that these farmers who are the backbone of our country are able to get loans whenever they require. The huge success of micro-finance institutions in different parts of India proves that genuine farmers need genuine access to credit.
There had been a decline in India’s GDP growth for the first quarter in this fiscal year and the projections from various quarters too, is bad. So, government should make sure that at least agriculture sector is not affected by ensuring that farmers get cheap loans on time, making fruits of development reach them, and allowing farmers to cash in with the rising prices. Rising prices can act as motivational factors for increasing acreage and yields.
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