An appropriate policy response always warrants a correct diagnosis of the problem. That is why the recent trend in inflation and its causes, and the inflation outlook take on exceptional importance ahead of the RBI's policy review on January 25.
Food and fuel are two perennial areas of concern.
In a surprise move, the Reserve Bank on Wednesday left the repo rate unchanged at 7.75 per cent, while the cash reserve ratio too is retained at 4 per cent.
The Economic Survey tabled today in the Lok Sabha by the Finance Minister Shri Pranab Mukherjee, says that the whole sale price index (WPI) of food inflation rose to 13.6 per cent in December 2010 on account of unfavourable agricultural supply conditions coupled with the waning of base effects.
As per data released by government on Thursday, price of pulses became cheaper by 5.63 per cent year-on-year.
Profit-booking and selling pressure on below-normal monsoon forecast, marred sentiments, traders said.
Food inflation surged to a four-and-a-half month high of 9.90 per cent during the week ended July 30 on the back of costlier onions, fruits, vegetables and protein-based items.
In May, price growth for drugs was in negative territory at (-)1 per cent
The empowered group of ministers on fuel pricing is to meet this week to take a view on the price of diesel.
India Ratings on Mondy projected a 7.7 per cent growth this fiscal driven by consumption demand.
The latest numbers likely to be seen by the government as a silver lining after the slowdown in economic growth during the first quarter.
Recent estimates show that foodgrain production in 2016-17 has touched a new record of 273.4 million tonnes or 8.7 per cent higher as compared to last year.
The 50-issue Nifty fell 29.60 points or 0.34 per cent to close at 8,642.55
The change from wholesale to retail inflation as an anchor means that the weightage of diesel in inflation has decreased
In a major decision to bring petroleum products in line with market rates, the government on Friday freed petrol from all pricing controls and hiked diesel prices by Rs 2 a litre.
The country saw two straight years of deficient monsoons.
Overall inflation, which has been in double digits for the last five months, was 10.55 per cent in June.
The Whole Price Index inflation figure for June is slated to be released tomorrow. "The WPI forecast is 11.12 per cent for June. . .the RBI is slowly withdrawing from its low policy rates regime and the trend is going to continue, given the inflationary pressure in the economy," IEG said in its monthly bulletin.
If you have indeed chosen your company wisely and have not paid too high a price to buy a part of it, you can indeed expect compounding to work in your favour and a great overall return over the long term. Inflation or no inflation, that would surely be a good position to be in!
The Planning Commission on Friday said that high inflation, primarily driven by rising food prices, is likely to ease in the next few months on the back of an expected good rabi crop.
Here is some background on the candidates seen as potential successors to Rajan at the RBI
Data on primary and fuel items would continue to be released on weekly basis.
However, some analysts say RBI Governor Raghuram Rajan may delay the rate cuts amid mounting concerns over the government's fiscal health.
The new wholesale price-based inflation basket will have as many as 676 products, including LCD TVs, mobile phones, and packaged drinking water among others, and is likely to be rolled out in June or July.
The Reserve Bank of India (RBI), in its quarterly monetary and macroeconomic review, has expressed concerns on the existing high levels of inflation rate when based on the consumer price index (CPI).
Terming the RBI action on Wednesday as a "pleasant surprise", analysts today cautioned that possibility of a rate hike in the future cannot be ruled out. Urijit Patel committee's report on monetary policy would clear the air on RBI's future stand, they added.
The Planning Commission on said food prices will come down in the next two months easing the overall inflation, which is currently at over 8.5 per cent.
Participants are keeping an eye on the Winter Session of Parliament, which started today, and US fiscal policies to be followed by President-elect Donald Trump
The worst of recession could coincide with the run-up to the elections.
The WPI inflation currently is ruling around 8.6 per cent. He said the duties like 5 per cent import duty on crude oil was abolished when international crude price touched a record high of $147 a barrel.
If the difference between provisional and final wholesale price index (WPI) numbers is taken as a leading indicator, the headline inflation rate, which is hovering around zero, is unlikely to change direction.
With the advancement of the base year and probably a revision of commodities in the index and their weights, it is expected that the index would provide a better picture of the current scenario of prices. The finance minister said information on weekly prices of manufactured products is highly meagre.
This is a terrible situation for a growing economy to be in, and the central bank would be expected to act to correct the situation.
Experts pointed out that the government's poor planning and lack of investment in farm infrastructure have led to food shortage in the country, which is been capitalised by traders.
The Economic Survey has acknowledged the measures taken by the UPA government on the macro stabilisation front and the successes achieved in containing the current account deficit and reducing the fiscal deficit.
The WPI inflation stood at negative 2.4% in May 2015, compared with a negative 2.65% in April 2015.
.jpg)
The rupee is set to breach the Rs 60-a-dollar mark again this week as the Street expects foreign institutional investors to continue pulling out of domestic markets. According to the street, this would result in government bond yields rising.
Already witnessing a sharp decline in inflation, India would see deflation or reduction in general price level from next month due to slackening demand, financial services firm Goldman Sachs said on Monday.
"This year (2009-10), our WPI is low and I don't see any problem on the horizon which could destabilise us except oil prices which remain a question," said Rajya Sabha MP and former Reserve Bank Governor Bimal Jalan. On the high fiscal deficit, Jalan said he did not think stimulus packages posed a problem. On taxation, he said it would not be good for the country not to have a reasonable rate of tax on profit and dividend.
While inflation dropped to 0.44 per cent for the week ended March 7, the BPLR of the top five Indian banks was in the range of 12.25-16.75 per cent. In the corresponding period last year, inflation was estimated at 7.78 per cent, while lending rates were in the range of 12.25-12.75 per cent. Real interest rate is the difference between WPI-based inflation and the prevailing benchmark prime lending rate.
© 2026 Rediff.com - Investor Information - Advertise with us - Disclaimer - Privacy Policy - Sitemap - Feedback - About us - Terms of use - Grievances