NEW DELHI: Wholesale price-based inflation rose marginally to 3.79% for the week ended January 5, after remaining at 3.5% two weeks in a row. The rise was mainly because some fuel items like coking coal, non-coking coal, furnace oil, naphtha and manufactured products like butter, coffee and edible oil became dearer during the week under review. This is even as prices of seasonal commodities like fruit and vegetables came down.
Though inflation is way below the 6.37% recorded a year ago, analysts expect the Reserve Bank of India not to soften its monetary policy stance this month. This is because inflation clouds are still looming over the economy due to a possible hike in fuel prices. The Prime Minister’s Economic Advisory Council, too, has projected inflation to go above 4% if prices of petrol and diesel are raised.
Meanwhile, the provisional figure for the week ended November 10 has been revised to 3.20% from 3.01%. The wholesale price index stood at 216.6 compared with 216 points in the previous week, an official release said on Friday.
Crisil director and principal economist D K Joshi said though inflation had gone up marginally, it would remain range-bound due to a combination of tight monetary policy and currency appreciation, which would make imports cheaper and contain price rise. However, in the wake of rising inflationary expectations, it was unlikely the RBI would cut any interest rate, he said.
“The RBI will not ease monetary policy. It is going to keep all the key rates unchanged in its upcoming review,” HDFC Bank chief economist Abheek Barua said.
Experts, however, feel inflation will not jump beyond the long-term RBI target of 5%. “If the government decides to hike fuel prices, it will put some inflationary pressure. But as food prices are stabilising, inflation will remain around 4%,” ICRA economic advisor Saumitra Chaudhury said.
Economists feel keeping fuel prices untouched will help in containing inflation artificially but will distort the fiscal position of the government. “In the backdrop of strengthening crude oil price in the global market, which is ruling above $90 per barrel, the under-recoveries of oil companies are mounting.
The companies are bailed out by the government through issuing oil bonds, which is an off-budget liability on government. Thus, any delay in taking a decision on passing on the burden will result in a fiscal cost,” said Mr Joshi.
In the week under review, the fuel index surged by 1.2% as prices of industrial fuels such as naptha and furnace, which are deregulated, registered positive momentum and contributed to inflation. The index of primary articles rose by 0.1%. Prices of raw cotton, rape seed and mustard seed all went up by 1% each.
Prices of tobacco went up by 3% while prices of fodder, sunflower and raw cotton, rose by 2% each. Bajra, jowar, urad and fruit and vegetables became cheaper. In the manufacturing segment, the prices of food articles like coffee, butter and imported oil went up by 1% each.
Though inflation is way below the 6.37% recorded a year ago, analysts expect the Reserve Bank of India not to soften its monetary policy stance this month. This is because inflation clouds are still looming over the economy due to a possible hike in fuel prices. The Prime Minister’s Economic Advisory Council, too, has projected inflation to go above 4% if prices of petrol and diesel are raised.
Meanwhile, the provisional figure for the week ended November 10 has been revised to 3.20% from 3.01%. The wholesale price index stood at 216.6 compared with 216 points in the previous week, an official release said on Friday.
Crisil director and principal economist D K Joshi said though inflation had gone up marginally, it would remain range-bound due to a combination of tight monetary policy and currency appreciation, which would make imports cheaper and contain price rise. However, in the wake of rising inflationary expectations, it was unlikely the RBI would cut any interest rate, he said.
“The RBI will not ease monetary policy. It is going to keep all the key rates unchanged in its upcoming review,” HDFC Bank chief economist Abheek Barua said.
Experts, however, feel inflation will not jump beyond the long-term RBI target of 5%. “If the government decides to hike fuel prices, it will put some inflationary pressure. But as food prices are stabilising, inflation will remain around 4%,” ICRA economic advisor Saumitra Chaudhury said.
Economists feel keeping fuel prices untouched will help in containing inflation artificially but will distort the fiscal position of the government. “In the backdrop of strengthening crude oil price in the global market, which is ruling above $90 per barrel, the under-recoveries of oil companies are mounting.
The companies are bailed out by the government through issuing oil bonds, which is an off-budget liability on government. Thus, any delay in taking a decision on passing on the burden will result in a fiscal cost,” said Mr Joshi.
In the week under review, the fuel index surged by 1.2% as prices of industrial fuels such as naptha and furnace, which are deregulated, registered positive momentum and contributed to inflation. The index of primary articles rose by 0.1%. Prices of raw cotton, rape seed and mustard seed all went up by 1% each.
Prices of tobacco went up by 3% while prices of fodder, sunflower and raw cotton, rose by 2% each. Bajra, jowar, urad and fruit and vegetables became cheaper. In the manufacturing segment, the prices of food articles like coffee, butter and imported oil went up by 1% each.
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