The week on week sharp decline in wholesale price is more than the RBI's expectation of 3% set for the March 2009. However on year on year basis inflation has moved up from 4.67% in April-March 2007-08 to 8.37% in April-March 2008-09.
The annual rate of inflation, calculated on point-to-point basis, stood at 0.26% for the week ended 28 March 2009 as compared to 0.31% for the previous week and 7.75% during the corresponding week of the previous year.
The manufactured products major contributor in total WPI with 63.75% weight rose by 0.2% to 200.3 from 200.0 for the previous week. The food product, chemical and chemical product and textile group recorded rise for the week ended 28 Mach 2009 compared with previous week.
The index for textiles group rose by 1.2% to 140.6 from 138.9 for the previous week due to higher prices of cotton yarn-cones, hessian cloth and cotton yarn-'hanks (3% each) and hessian & sacking bags and other cotton yarn (2% each).
The index for food products group also rose by 0.05% to 218.9 from 218.8 for the previous week due to higher prices of imported edible oil (6%), malted food and rice bran oil (2% each) and oil cakes, gingelly oil and groundnut oil (1% each).
However, the prices of sugar (1%) declined. On a flip side the index for paper and paper products group declined by 0.1% to 204.0 from 204.2 for the previous week due to lower prices of newsprint (1%).
A primary article, which is another major contributor to WPI declined by 0.3% to 245.0 from 245.7 for the previous week. Among them index for food and non-food articles registered an increase for week ended 28 March 2009 as against a week ago.
The index for food articles group rose by 0.3% to 242.6 from 241.8 for the previous week due to higher prices of barley (5%), ragi, bajra and fruits and vegetables (2% each) and maize (1%). However, the prices of tea (1%) declined.
The index for non-food articles group rose by 0.5 % to 227.0 from 225.8 for the previous week due to higher prices of raw rubber (8%), raw cotton (2%) and castor seed and gingelly seed (1% each). However, the prices of linseed (2%) and copra and fodder (1% each) declined.
The index for fuel power light and lubricants group remained unchanged at its previous week's level of 320.9.
The week on week fall in inflation construct a way for disinflation where there is a slowing of the rate at which prices increase. The sharp fall in global commodity and crude oil prices have resulted into lower inflation at 0.26% for the week ended 28 March 2009 from the peak of 12% growth recorded in August 2008. The fluctuations in the price levels have added stress on real interest rate to move downwards.
The spread between inflation and PLR (prime lending rates) has significantly become wider due to sharp fall in inflation and comparatively negligible reduction in lending rates from banks. At this background there is immense pressure on RBI to slash the interest rate, which will facilitate economy growth but higher CPI number, create anxiety for policymakers to review the interest rate structure.
The annual rate of inflation, calculated on point-to-point basis, stood at 0.26% for the week ended 28 March 2009 as compared to 0.31% for the previous week and 7.75% during the corresponding week of the previous year.
The manufactured products major contributor in total WPI with 63.75% weight rose by 0.2% to 200.3 from 200.0 for the previous week. The food product, chemical and chemical product and textile group recorded rise for the week ended 28 Mach 2009 compared with previous week.
The index for textiles group rose by 1.2% to 140.6 from 138.9 for the previous week due to higher prices of cotton yarn-cones, hessian cloth and cotton yarn-'hanks (3% each) and hessian & sacking bags and other cotton yarn (2% each).
The index for food products group also rose by 0.05% to 218.9 from 218.8 for the previous week due to higher prices of imported edible oil (6%), malted food and rice bran oil (2% each) and oil cakes, gingelly oil and groundnut oil (1% each).
However, the prices of sugar (1%) declined. On a flip side the index for paper and paper products group declined by 0.1% to 204.0 from 204.2 for the previous week due to lower prices of newsprint (1%).
A primary article, which is another major contributor to WPI declined by 0.3% to 245.0 from 245.7 for the previous week. Among them index for food and non-food articles registered an increase for week ended 28 March 2009 as against a week ago.
The index for food articles group rose by 0.3% to 242.6 from 241.8 for the previous week due to higher prices of barley (5%), ragi, bajra and fruits and vegetables (2% each) and maize (1%). However, the prices of tea (1%) declined.
The index for non-food articles group rose by 0.5 % to 227.0 from 225.8 for the previous week due to higher prices of raw rubber (8%), raw cotton (2%) and castor seed and gingelly seed (1% each). However, the prices of linseed (2%) and copra and fodder (1% each) declined.
The index for fuel power light and lubricants group remained unchanged at its previous week's level of 320.9.
The week on week fall in inflation construct a way for disinflation where there is a slowing of the rate at which prices increase. The sharp fall in global commodity and crude oil prices have resulted into lower inflation at 0.26% for the week ended 28 March 2009 from the peak of 12% growth recorded in August 2008. The fluctuations in the price levels have added stress on real interest rate to move downwards.
The spread between inflation and PLR (prime lending rates) has significantly become wider due to sharp fall in inflation and comparatively negligible reduction in lending rates from banks. At this background there is immense pressure on RBI to slash the interest rate, which will facilitate economy growth but higher CPI number, create anxiety for policymakers to review the interest rate structure.
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