Finance Minister Chidambaram said rising prices of primary food articles was worrying him. High food prices the world over and a supply-demand mismatch were behind the high prices, he said, adding this was beyond the influence of the monetary policy.
The government's efforts to bring down inflation to tolerable limits and curb runaway prices might have begun to bear some fruit, albeit at a snail's pace.
The Reserve Bank may give up its opposition to the proposal of a monthly compilation and release of inflation data, with D Subbarao moving to the central bank from the finance ministry, which was open to the idea of a shift in the time table of the Wholesale Price Index.
Slightly lower prices of food items like fruits, vegetables and milk pushed inflation down to to 12.34 per cent from 12.40 per cent a week ago.
The government's efforts to bring down inflation to tolerable limits and curb runaway prices might have begun to bear some fruit.
Despite the government's efforts to control prices, inflation continues to rise, as prices of pulses, spices, eggs, fish and meat among other things continued to rise.
The wholesale price index based inflation rose to 12.44 per cent for the week ended August 2. Wheat has a weight of 1.38 per cent in the index. The department of economic affairs and the department of food and public distribution are in favour of selling 4 million tonnes wheat.
The Reserve Bank of India has painted a gloomy picture for the economy. A survey conducted by the central bank said India's gross domestic product (GDP) would grow 7.9 per cent this year against the earlier projection of 8.1 per cent.
The increase by more than three per cent is largely due to jump in the rate of inflation in the case of WPI for fuel, power, light and lubricants
The Reserve Bank of India may soon be given the job of both collecting and processing inflation data.
In an earlier analysis for the period till April 26, it had been found that of the 365 items in the WPI, the index for as many as 166 items had not been revised for more than four months. The latest analysis as of June 21 shows that the index for around 55 of these 166 items has been revised. In effect, only one-third of the items have seen an index revision. During this period, headline inflation has moved from 8.27 per cent to 11.63 per cent.
The rise has been mainly on account of increase in prices of fruits, vegetables, imported edible oils, tea, sea fish, cement and iron and steel and spices, though the index for fuel items declined during the week.
The 30-share Sensitive Index or Sensex ended the weak in the negative region. It tanked 620 points to close at 13,802, a loss of 4.3% compared to Thursday's close.
There is no end in sight to the Centre's inflation woes. The wholesale price index-based inflation is expected to rise to 11.42 per cent for the week ended June 14, data for which will be released on Friday.
Inflation, as measured by the movement in the wholesale prices, was 0.26 for the week ended April 11 and 8.23 per cent in the corresponding period a year ago. While the price of rice bran oil was up by 11 per cent, khandsari and cotton seed oil prices rose by eight per cent each.
RBI Governor Raghuram Rajan will announce the monetary policy on April 1 and expectations of a status quo are rising ever since the official data on consumer price inflation for February pointed to a cool down to 8.1 per cent.
"We believe loose liquidity will increasingly feed into higher inflation from current levels. However, we expect a falling output gap, the primary determinant of inflation, and currency appreciation will keep inflation within the RBI's target range of below 5 per cent," Goldman Sachs analyst Tushar Poddar said in the report.
Inflation declines to 3.65 per cent for the week ended December 8, compared to 3.75 per cent in the previous week, mainly due to fall in prices of food articles and some manufactured items. The wholesale price index-based inflation stood at 5.63 per cent in the corresponding week a year ago.
Bankers need to take a call on whether they will allow technology firms to run banks or banks themselves will turn into tech firms, says Tamal Bandyopadhyay.
During the week, prices of steel, condiments and spices, marine fish and fruits and vegetables escalated. Among the manufactured items, prices of aluminium, locomotives and railway wagons increased while the prices of iron and steel declined.
Finance Minister P Chidambaram attributed on Friday the fall in wholesale prices-based inflation to steps taken on the monetary front and said the government will continue to monitor the price-situation. He said consumer prices-based inflation was also down by 80 basis points in September over the previous month. The point-to-point rate of inflation, based on the CPI-IW, has decreased from 7.26 per cent in August to 6.40 per cent in September.
For the first time after the government took drastic steps to rein in runaway price rise, inflation slipped to 7.14 per cent in the week ended April 5, 2008. In the previous week inflation had surged to a 40-month high of 7.41 per cent, mounting pressure on the Reserve Bank to further tighten money supply in its forthcoming annual credit policy later this month.
Inflation has zoomed to a three-year high of 7.41 per cent for the week ended March 29, against 7 per cent in the previous week.The wholesale price-based inflation, which stood at 7 per cent in the previous week, surged this time mainly on account of rising prices of fruits and vegetables, pulses, cereals, condiment and spices and some manufactured items.
Of the five years when Manmohan Singh was the finance minister, only in two years did the government manage to keep the average annual inflation rate below 10 per cent. The remaining three years were hit by an average annual inflation rate (based on the wholesale price index) of 13.7 per cent in 1991-92, 10.1 per cent in 1992-93 and 12.6 per cent in 1994-95. Yet, a comparison should be useful.
Industry experts insist that rising steel prices are triggered by rising input cost like scrap, iron ore and coking coal. The current international pricing scenario demands a prices increase domestically. The rising raw material costs and other available inputs as well as limited capex resources have driven the steel prices. The government has been taking steps to control prices by increasing the export duties on some commodities and even banning exports on some.
Here is some background on the candidates seen as potential successors to Rajan at the RBI
The price rise in individual key food commodities over the last one year is significantly higher than what is conveyed by the wholesale price index. While the latest government data show inflation at 6.68 per cent for the week ended March 15, the price change in most food items is in double digits.
Inflation based on the wholesale-price-index remained unchanged at 6.46 per cent for the week ended March 17 when compared to the week before. In fact, inflation is now unchanged for the last three weeks.
Onion prices may jump during the Eid festival in the UAE as the Indian government has suspended fresh exports of the commodity for a fortnight in the wake of soaring domestic prices.
Inflation rose to over nine-month high at 5.11 per cent for the week ended March 1, due to rise in prices of some manufactured items and aviation turbine fuel, dashing all hopes of interest rate cuts by the RBI to boost the sagging industrial production.The Wholesale Price Index-based Inflation rate stood at 5.02 per cent in the previous week and 6.51 per cent in the correspondingly week a year earlier.
The wholesale price-based inflation stood at 5.34 per cent in the correpsponding week a year ago. This is a third week in a row that inflation has remained below the four per cent mark.
Inflation rose to 4.67 per cent for the week ended July 22, from 4.52 per cent in the previous week mainly due to increase in the prices of vegetables, pulses, industrial fuel and some manufactured items.
The previous low was recorded at 5.69 per cent for the week ended February 23, 2008. The index of food articles group declined by 0.7 per cent as prices of jowar fell by five per cent, fruits and vegetables by three per cent, eggs and bajra by one per cent each.
The wholesale prices-based index stood at 4.72 per cent during the corresponding week previous year.
The government's statistical system is being overhauled with painful slowness. The base years for the indices are too far back in time, the weights for different sub-sets are out of date, the methods of data collection are defective, and the statistical methods used simplistic.
Inflation declined further to 6.61 per cent for the week ended December 13 from 6.84 per cent in the previous week.
Weights of the fuel group are set to rise in the revised Wholesale Price Index.
Inflation rose to 3.83 per cent for the week ended January 12, against 3.79 per cent in the previous week mainly due to rise in prices of manufactured items and some food articles. The wholesale price-based inflation stood at 6.15 per cent in the corresponding week a year ago.
Kartaar Singh, a farmer of Mokha village in Punjab's Kapurthala district, used to travel about 50 km on his scooter to Jalandhar's new sabzi mandi, or wholesale vegetable market, to sell his vegetables every day.
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