Fall in both WPI and CPI inflation to pressure RBI, say analysts
Growth rate in per capita income is projected to fall to the lowest in 21 years this financial year - except for the financial years 2019-20 (FY20) and 2020-21 (FY21) - according to the first advance estimates. During the last 21 years, the two periods - FY20 and FY21 - saw growth rates in per capita income lower than 7.9 per cent, seen during FY24. This was despite the real gross domestic product (GDP) being projected to grow by 7.3 per cent in the current financial year by the first advance estimates.
Food prices, which have contributed to a large part of inflation over recent years, have remained benign, despite unseasonal rain.
Inflation crossed five per cent mark to touch 5.16 per cent for the week ended September 30 from 4.77 per cent in the previous week mainly due to increase in the prices of energy, food and manufactured items.
Inflation declined marginally to 4.91 per cent for the week ended August 19 from 4.92 per cent in the previous week despite increase in prices of minerals, food and manufactured items.
Retail inflation in March inched up to 8.31 per cent from 8.03 in February, mainly on account of a rise in fruit and vegetable prices.
Inflation declined marginally to 4.61 per cent for the week ended July 29, from 4.67 per cent in the previous week mainly due to cheaper food items, including milk.
Food prices rose 18.19 per cent year-on-year in October, slower than an annual rise of 18.4 per cent in September.
The wholesale price-based inflation surged to more than a decade high of 14.23 per cent in November, mainly due to hardening of prices of mineral oils, basic metals, crude petroleum and natural gas. WPI inflation has remained in double digits for eight consecutive months beginning April. Inflation in October this year was at 12.54 per cent, while in November 2020 it was at 2.29 per cent. "The high rate of inflation in November 2021, is primarily due to rise in prices of mineral oils, basic metals, crude petroleum & natural gas, chemicals and chemical products, food products etc as compared to the corresponding month of the previous year," the commerce and industry ministry said in a statement on Tuesday.
Vegetables account for 5.44 per cent of the Consumer Price Index.
The median forecast for wholesale price index-based inflation in the first quarter of 2010/11 is at 10.4 per cent, according to Reserve Bank of India's survey, higher than 9.5 per cent in the previous survey.
During the week, prices of fish marine were dearer by 10 per cent, arhar, fruit and vegetables by 2 per cent each while urad and moong rose by 1 per cent each.
Data on primary and fuel items would continue to be released on weekly basis.
The RBI's idiosyncratic focus on wholesale price inflation at the expense of retail inflation is a serious policy error.
Indian households database Consumer Pyramids answers why two years of high inflation did not matter to the consumers of the country.
The government on Saturday imposed a 40 per cent duty on the export of onions to increase domestic availability amid signs of increasing prices. The export duty, which is the first time ever on onion, has been imposed as the retail sale price of the kitchen staple, according to government data, touched Rs 37/kg on Saturday in Delhi. The finance ministry through a Customs notification imposed a 40 per cent export duty on onions till December 31, 2023.
Inflation remained unchanged at the previous week's level of 5.16 per cent for the week ended October 7
The Commerce and Industry Ministry will soon seek Cabinet nod to give out inflation data every month instead of the present practice of weekly release.
There was acceleration in prices of fuel and power (11.69 per cent) and manufactured products (2.55 per cent).
Wholesale prices-based inflation rate rose to a ten-month high of 5.02 per cent for the week ended February 23, as food and some manufactured products turned costly. Inflation rate for the previous week was at 4.89 per cent and was last above five per cent on May 19, 2007 (5.06 per cent).
Benchmark indices Sensex and Nifty gave up early gains to close lower for a fourth straight session on Thursday due to selling in IT and banking shares amid weak global equities. The 30-share BSE benchmark settled 98 points or 0.18 per cent lower at 53,416.15. During the day, it hit a high of 53,861.28 and a low of 53,163.77. The broader NSE Nifty also pared initial gains and ended 28 points or 0.18 per cent down to settle at 15,938.65.
Inflation rose to 5.32 per cent for the week ended December 9, from 5.16 per cent in the previous week mainly due to increase in prices of some food articles including vegetables.
Inflation fell to 4.06 per cent for the week ended March 18 as against 4.28 per cent in the preceding week, mainly due to cheaper food articles including vegetables and non-food items.
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.
Quarterly earnings from IT majors Tata Consultancy Services (TCS), Infosys, macroeconomic data announcements, global trends and trading activity of foreign investors would guide the movement in the equity market this week, analysts said. Movement of global oil benchmark Brent crude and the rupee will also influence trading in the markets. "All eyes will be on the beginning of corporate performance for the second quarter of the current fiscal year. TCS is slated to unveil its Q2 results on October 11, with HCL Technologies and Infosys following suit on October 12.
The rapid deceleration in prices has ignited a debate in New Delhi whether Asia's third-largest economy is heading towards deflation.
The deflationary trend has bolstered the case for a rate cut by RBI.
Inflation declined to 5.16 per cent for the week ended December 2 from 5.30 per cent in the previous week mainly due to a fall in the prices of fuel and food items.
The good news on inflation continues as the wholesale price index fell for the tenth week in a row to an almost 11-month low of 5.24 per cent for the week ended January 3, prompting the Finance Ministry to project that it would go down to 3-4 per cent by March 31.
Wholesale price rise slowed down to 3.51 per cent for the week ended April 1 even though essential items like vegetables; industrial fuels and some manufactured products became costlier.
WPI-based inflation falls to 5-month low of 6.16%.
In November, wholesale prices, India's main inflation measure, rose 7.52 percent, their fastest pace in 14 months.
The Reserve Bank of India's rate-setting panel on Wednesday began its three-day deliberations on the next bi-monthly monetary policy amid expectations of at least a 35-basis-point hike in the interest rate to check high inflation. If raised, it will be the third consecutive hike in the repo rate -- the short-term rate at which the RBI lends money to banks. The central bank has already announced to gradually withdraw its accommodative monetary policy stance.
Wholesale inflation rate at five-month high in May; rupee breaches 60-a-$ mark, slides to lowest since May 5; Iraq crisis threatens to push global crude oil prices.
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.
Analysts are of the view that long-term investors could continue to hold the stock, irrespective of the MSCI development.
RBI in its policy review last month kept interest rates unchanged and said it sees an upside risk to inflation.
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.
The Value Added Tax system has no adverse impact on consumer prices, and revenue earnings under the new regime have shot up by 15.3 per cent during the first quarter of the current fiscal, Finance Minister P Chidambaram told the Rajya Sabha on Tuesda
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