Zero inflation will pave way for rate cuts in the next RBI policy.
The country's economic growth slipped to a decade-low of 4.5 per cent in 2012-13 and is estimated at 4.9 per cent in the current financial year.
Inflation increased to 4.13 per cent for the week ended June 23 compared to 4.03 per cent in the previous week mainly due to rising prices of food articles and manufactured products.
Softening of global commodity prices might not help much
After consumer price index jumped the 6.3-per cent mark in May and wholesale inflation set a record of 12.94 per cent, house economists at Swiss brokerage UBS Securities have warned that the country is facing more upside risks on the inflation front that is set to averaging at 5 per cent for the year. Rising prices of edible oils and protein rich items pushed retail inflation to a six-month high of 6.3 per cent in May, breaching the comfort level of the Reserve Bank and thus rendering reduction in interest rates a difficult proposition in the near term. Led by petrol price, that has crossed the Rs 100-mark in many states, wholesale inflation too accelerated to a record 12.94 per cent in May. While crude oil has crossed $70 a barrel on account of rising prices of crude oil and manufactured goods due to spike in commodities, and the low base of last year due to the lockdown.
Inflation declined to 5.06 per cent for the week ended May 19 as compared to 5.27 per cent in the previous week due to lower prices of food articles including moong and wheat, and manufactured products.
India Inc has an impressive report card to show for the first quarter of this financial year.
Inflation rose to 0.70 per cent for the week ended April 25 on account of higher prices of essential food articles like cereals, pulses, vegetable, milk and sugar.
"The WPI is not a true reflection of the burden put on the people through the rise in prices of essential commodities. It is a misnomer to use it as an index for measuring inflation," party leader Sitaram Yechury told reporters. Quoting the oft-repeated phrase 'statistics, more statistics and damned lies', he said the weightage of the basket of food items to calculate the WPI was 22 per cent as against that of steel products which was 25 per cent.
Inflation eased to 0.18 per cent, the lowest ever in the last three decades, even as prices of food articles like pulses, cereals and vegetable hardened during the week ended April 4.
Inflation declined for the tenth consecutive week today to 5.24 per cent for the week ended January 3, primarily due to decline in prices of food articles.
It is the six per cent target RBI is more concerned about.
Inflation increased to 3.11 per cent for the week ended November 3, compared to 2.97 per cent a week ago, mainly due to rise in prices of food items, petroleum products and manufactured articles.
The wholesale prices-based inflation rose by 0.21 per cent at 4.82 per cent during the week ended August 5, as against 4.61 per cent for the previous week, with some manufactured products along with aviation turbine fuel becoming costlier.
Concerns related to capital outflows in the aftermath of the first US interest rate hike in nearly a decade predominantly weighed on the rupee trade.
The wholesale price-based index stood at 5.27 per cent in the corresponding week a year ago.
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.
Repo rate may well end 2013 at 8 per cent, where it had begun the year.
The change in the baseline for IIP and WPI, currently at 2004-05, is expected to bring in more accuracy in mapping the level of economic activity and calculating other numbers like national accounts.
The recent softening of inflation is purely a base effect at play.
The Reserve Bank had kept policy rate unchanged in its review on April 7.
Inflation rose to 3.42 per cent for the week ended September 22, compared to 3.23 per cent in the previous week, mainly due to rise in prices of manufactured items like salt, imported edible oil and some food products. The wholesale price-based index stood at 5.43 per cent in the corresponding week a year ago.
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After a string of extremely low and even negative monthly numbers, the industrial sector grew by 2.6 per cent year on year, far exceeding expectations.
Inflation remained unchanged at the previous week's level of 4.27 per cent for the week ended July 7, despite a fall in prices of fruit and vegetables, poultry chicken, moong and masur, and some manufactured items.
Inflation further eased to 4.80 per cent for the week ended June 2 as compared to 4.85 per cent in the previous week, mainly due to decline in food prices and some fuel and manufactured items.
On the reduction in the SLR ratio, he said it was a signal from the point of view of long-term reforms.
Next set of Q4 FY16 earnings, progress of monsoon along with election poll outcome will dictate market trend this week
On growth, the Governor said the prospects in the last few months have improved.
The wholesale prices-based index stood at 4.72 per cent during the corresponding week previous year.
India's economic growth rate is expected to be at least 6 per cent in the 2013-14 fiscal, Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan said.
The government will unveil the Consumer Price Index data and the Wholesale Price Index data for August on Monday.
RBI has kept interest rate unchanged at 8 per cent since January
Inflation based on the Wholesale Price Index cooled to a 5-year low of 1.77 per cent in October driven by softening prices of fuel and food items.
In February last year, it was (-)2.17 per cent.
According to the global research firm, though a sharp fall in WPI inflation and negative growth in Industrial production is exerting pressure on the RBI to cut rates, the quantum of rate cut will be more important than the timing.
The stock of the country's largest passenger vehicle maker, Maruti Suzuki India (MSIL), has been hitting successive all-time highs over the past three trading sessions. The rally in the scrip has helped it notch over a 21 per cent gain since the start of February, outperforming the National Stock Exchange Nifty Auto Index. The gains for the leader of small passenger cars have been more recent, as the company still trails the Nifty Auto over one- and two-year periods.
In the second week of December, the food inflation was at 18.65 per cent. Potato prices more than doubled while pulses became costly by over 41 per cent over the last year.
Rajan has been facing continuous attacks by Bharatiya Janata Party MP Subramanian Swamy and some other sections, who have alleged that he has failed to lower interest rates and boost the economy
GDP growth in November is the second-highest since January 2012 when it had expanded 5.7%.
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