Prices of most commodities, barring wheat, continued to remain firm on an annual basis, as per Wholesale Price Index data released by the government in New Delhi.
Inflation data and global trends would be the major driving factors for the equity markets this week which after a record-breaking run took a breather in recent trades, analysts said. The overall market sentiment remains positive, supported by improving economic data and earnings but higher valuations can trigger bouts of profit booking, they said further. During the last week, which the 30-share BSE benchmark rose by 175.12 points or 0.30 per cent.
Over 300 new items such as mobile phones and digital cameras would figure in the new wholesale price index that would give a better picture of the price situation. And close to 30 items would be knocked off from the new inflation series expected to be out by December.
The wholesale price index, coming below four per cent, may prompt the Reserve Bank of India to cut key policy rates. An indication was made by the RBI Governor D Subbarao in Tokyo on Wednesday. During the week, prices of manufactured items such as sugar, imported edible oil and textile items such as cotton yarn got cheaper.
The market believes there will soon be another offer to buy the bonds.
The inflation in vegetables remained stubborn, which jumped 16.91 per cent
The report on the alleged liquor scam, a hot button issue in the run-up to the elections, claimed a loss of revenue to the tune of Rs 941.53 crore, saying timely permissions were not taken for opening the liquor vends in non-conforming municipal wards.
Wholesale Price Index for the month ended March moderated to 3-year low of 5.96 per cent against Reserve Bank's projection of 6.8 per cent.
Inflation rose to (-)1.17 per cent for the week ended July 11 compared to (-)1.21 per cent in the previous week as food articles like pulses, cereals, fruits and vegetables turned expensive.
The empowered group of ministers on fuel pricing is to meet this week to take a view on the price of diesel.
The surge in inflation is a major cause of concern even for giants like the United States and China and rich nations like Britain and Singapore.
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.
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 rupee resumed lower at 61.15 per dollar as against the last weekend's level of 61.07 at the Interbank Foreign Exchange market and hovered in the range of 61.15 and 61.28 before quoting at 61.24 per dollar at 1030 hours.
Already retail inflation has risen to 6.07 per cent in February, crossing the upper band of the Parliamentary mandate. This is the second consecutive month in 2022 when retail inflation has crossed the 6 per cent mark having hit 6.01 per cent in January.
Food prices probably fueled a sharp rise in India's retail inflation in December after the record low struck the previous month.
Inflation fell to 3.84 per cent in the week ended July 30 from 4.07 per cent a week ago, due to cheaper food items and manufactured products although fuel prices went up.
The reading for June WPI inflation was revised to 5.66 percent from 5.43 percent earlier.
Retail inflation measured by the consumer price index has risen sharply across food and non-food constituents, including services, keeping inflation expectations high, the Reserve Bank of India said in its Second Quarter Review of Monetary Policy 2013-14.
Interestingly, it is the long products that have witnessed the steepest price increase (between 50 per cent and 62 per cent), clearly reflecting the booming demand from construction activities. However, the flat products, by comparison, have seen a price increase of 17-24 per cent, almost half compared with the long products. Driven by demand, the share of the long products in the total steel production has been steadily increasing.
Inflation declined to below four per cent for the first time in more than 15 months to touch 3.94 per cent for the week ended August 18, much less than the Reserve Bank's projection for this fiscal.
Central bank should raise key policy rates again but avoid becoming a prisoner of its own making.
Benchmark shares indices ended marginally higher on Tuesday, amid a volatile trading session, led by oil exploration major ONGC.
Food inflation in April stood at 6.08 per cent, while the overall WPI inflation fell to a three-year low of 4.89 per cent.
The latest numbers likely to be seen by the government as a silver lining after the slowdown in economic growth during the first quarter.
From the Sensex pack, Infosys, Hindustan Unilever, Reliance Industries, ICICI Bank, Larsen & Toubro, Asian Paints, Nestle, Axis Bank, Wipro and Kotak Mahindra Bank were the major gainers. JSW Steel, State Bank of India, Tata Steel, Bajaj Finserv, UltraTech Cement, IndusInd Bank, Tata Motors and Bajaj Finance were the major laggards.
After unseasonal rains, supply disruptions and pandemic-induced woes pushed retail inflation well over the Reserve Bank's comfort zone in 2020, the scenario is likely to stay that way at least in the short term as economic recovery slowly gains foothold. For most part of this year, pricier food items pushed the retail inflation, based on Consumer Price Index (CPI), higher in the range of 6.58-7.61 per cent, except for March when the reading was 5.91 per cent. Experts believe retail inflation is likely to average around 6.3 per cent this fiscal and mostly will remain sticky going forward owing to pick-up in demand across sectors.
Costlier food items, including vegetables, pushed the October wholesale inflation to 7 per cent, the highest in the current financial year.
The wholesale price index during the corresponding week a year ago was as high as 12.91 per cent, while in the previous week, it stood at (-) 1.58 per cent. During the week, prices of barley, jowar and gram rose by two per cent and condiments and spices, arhar and fruits and vegetables by one per cent each.
The excise duty cut will translate into a reduction of Rs 9.5 a litre on petrol and Rs 7 a litre in diesel after taking into account its impact on other levies.
Vegetable prices which had witnessed a 21.16 per cent contraction in June, shot up by 21.95 per cent in July.
To be out by October, it reflects weight of components in GDP.
Inflation is likely to remain above 11 per cent this year and may come down to around 9 per cent by March next year, says a survey of economists conducted by the Reserve Bank.
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 wholesale price index stood at 6.21 per cent during the corresponding week a year ago. Prices of maize, arhar and moong declined by one per cent each. However, prices of fuel remained unchanged at the previous week's level.
In fuel and power segment, inflation saw a sharp surge to a near double digit inflation at 9.99 per cent, against 4.37 per cent in July.
The wholesale price-based inflation stands at 9.9 per cent in March, but many analysts criticise the compilation of data, saying it includes several items that are no longer in vogue.
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