Credit Policy: RBI sees sticky inflation; risks to upside

April 16, 2012 By Leave a Comment

The Reserve Bank of India (RBI) said inflation was likely to remain near current levels during the fiscal year, with risks still to the upside, sounding a cautious note a day before it is expected to cut its policy interest rate for the first time i

n three years.

Earlier on Monday, India reported annual wholesale price index (WPI) inflation for March at 6.89%, mainly driven by higher food prices, exceeding forecasts.

“While inflation has moderated, risks to inflation are still on the upside,” the RBI said in a report.

“Monetary policy would … need to support growth without risking external balance or inflation by excessively fuelling demand,” the report said.

The RBI has left interest rates on hold after raising them 13 times between March 2010 and October 2011. It disappointed many investors a month ago when it left rates unchanged, accompanied by strong anti-inflationary comments.

On Monday, the central bank said inflationary drivers remain, with inflation “likely to remain sticky at about current levels” in the fiscal year that started this month.

“Price pressures persist with considerable suppressed inflation in oil, electricity, coal and fertilisers, (and) the incomplete pass through of rupee depreciation,” it said.

The government heavily subsidises fuel and fertilisers, and is expected eventually to free up fuel prices in order to ease its fiscal burden, which would add to inflation.

Most analysts polled by Reuters last week expected the RBI to begin its easing cycle on Tuesday with a 25 basis point cut in the policy repo rate to 8.25%, while a minority expected it to bring down the cash reserve ratio for banks by 25 basis points to 4.50%.

An RBI survey of economists forecast the Indian economy to grow at 7.2% in the fiscal year that began on April 1, little changed from the 7.3% forecast in the last survey three months ago.

Growth in Asia’s third-largest economy slowed to 6.1% in the three months to December, the weakest in nearly three years. The government has forecast growth in the fiscal year that ended on March 31 to dip below 7% for the first time in three years.

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India’s cbank tightens monetary policy more than expected

July 28, 2010 By Leave a Comment

July 27 (Reuters) – India’s central bank raised interest rates more forcefully than expected on Tuesday in the face of inflation that has held stubbornly above 10 percent for the past five months.

The RBI lifted the repo rate, at which it lends to banks, by 25 basis points to 5.75 percent, which was in line with expectations, but raised the reverse repo rate, at which it absorbs excess cash from the system, by 50 basis points to 4.50 percent.

Economists and investors had expected a 25 basis point increase in the reverse repo rate.

As expected, it left the cash reserve ratio (CRR) for banks at 6.00 percent, amid ongoing tight liquidity in the banking system.

Inflation in India emerged last year in the wake of a poor monsoon that drove up food prices but has spread broadly throughout the economy, spawning protest against a government whose voter base is predominantly poor and rural.

New Delhi’s decision to increase fuel prices is expected to add nearly a percentage point to wholesale price index (WPI) inflation starting in July and led the opposition to call a one-day nationwide strike early this month.

The government is counting on normal summer monsoon rains to results in better crop yields and ease pressure on food prices, and has said inflation should decline to 6 percent by December, a figure private economists put closer to 8 percent. (Reporting by Tony Munroe)

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India plan panel deputy sees inflation at 5-6 pct by Dec

July 15, 2010 By Leave a Comment

July 14 (Reuters) – India’s wholesale price inflation will ease to 5 percent to 6 percent by December, deputy chairman of planning commission Montek Singh Ahluwalia told reporters on Wednesday.

While India is on track to grow at 8.5 percent in the fiscal year that ends in March 2011, it is grappling with wholesale price index (WPI) inflation that has hit 10.55 percent in June.

Markets widely expect India’s central bank to raise policy rates by 25 basis points in its scheduled policy review on July 27.

(Reporting by Manoj Kumar; editing by Malini Menon)

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India’s food price index up 16.90 pct y/y – govt

June 25, 2010 By Leave a Comment

June 24 (Reuters) – India’s food price index rose 16.90 percent in the year to June 12, while the fuel price index climbed 13.18 percent, government data released on Thursday showed.

The pace of increase in food prices quickened from the previous week’s annual rise of 16.12 percent, while fuel price inflation remained steady.

The primary articles index was up at 17.60 percent. Wholesale price index INWPI=ECI, the most closely watched inflation gauge in India, rose 10.16 percent in May from a year earlier. (Reporting by Abhijit Neogy and Matthias Williams; editing by Malini Menon)

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Indian shares rise to 1-mth high; Reliance leads

June 15, 2010 By Leave a Comment

MUMBAI, June 14 (Reuters) – Indian shares rose to one-month
highs on Monday, tracking firm Asian markets, with Reliance
Industries Ltd (RELI.BO) leading the gains after the energy
conglomerate announced its re-entry into the telecom sector.

Banks were also trading higher as investors awaited May
inflation due around noon (0630 GMT). A Reuters poll has
forecast the wholesale price index INWPI=ECI probably rose
9.56 percent from the same month a year earlier.
[ID:nSGE6590DL]

By 10:23 a.m. (0453 GMT), the 30-share BSE index .BSESN
was trading up 0.96 percent at 17,229.07, with 24 of its
components gaining. In early trade, it had hit 17,254.55, which
was its highest since May 14.

Reliance Industries, which has the highest weight on the
Sensex, was up 1.5 percent at 1,061.50 rupees after rising as
much as 2.2 percent. [ID:nSGE65D051]

On Friday, billionaire Mukesh Ambani-controlled Reliance
Industries made a dramatic return to telecoms, agreeing to buy
Infotel Broadband the only company to win a nationwide licence
in India’s broadband wireless spectrum auction. [ID:nSGE65A071]

Separately, the Economic Times reported on Monday the
company would also foray into power sector. [ID:nSGE65D01H]

“Although RIL’s re-entry into the telecom provides some
clarity on utilisation of its future cash flows, in our view,
there are likely bigger opportunities in power, mining, E&P and
infrastructure,” Goldman Sachs said in a note.

It maintained a “neutral” rating on the stock.

Traders said the underlying investor sentiment was still
shaky because of lingering concerns about the euro zone debt
problems and their impact on foreign fund flows.

Foreign institutional investors (FIIs) are net buyers of
around $166 million of Indian equities so far this June,
helping the main index gain 1.7 percent in the period but
volume has been low.

In May, the funds had dumped $2 billion of stocks and the
index had dropped 3.5 percent.

“The gains in Asia are supporting the rise today,” said
Kunal Sukhani, manager of institutional equities at brokerage
Asian Markets Securities. “Though FIIs have been buying off and
on this month, it does not seem like money flow has returned as
yet.”

State Bank of India (SBI.BO), the country’s No. 1 lender,
was up 0.6 percent while rivals ICICI Bank (ICBK.BO) and HDFC
Bank (HDBK.BO) rose 0.7 percent and 0.9 percent respectively.

In the broader market, gainers were more than twice the
number of losers on volume of 97 million shares.

The 50-share NSE index was up 0.8 percent at
5,160.15.

STOCKS ON THE MOVE

* Dr Reddy’s Laboratories (REDY.BO) fell 3.7 percent to
1,409.95 rupees after a U.S. court restrained the drug maker
from distributing a generic version of allergy drug Allegra-D.
[ID:nSGE65D02Q]

* SpiceJet (SPJT.BO) rose more than 6 percent after the
founder of Sun TV (SUTV.BO), Kalanithi Maran, and his aviation
firm Kal Airways Pvt Ltd agreed to buy a 37.7 percent stake in
the airline. [ID:nSGE65D04R]

The stock later trimmed gains to 0.2 percent at 56.15
rupees.

* Engineers India (ENGI.BO) was up 1.6 percent at 320.70
rupees after the state-run engineering services firm said it
received approval from the federal Ministry of Petroleum &
Natural Gas for an offer for sale. [ID:nSGE65D03J]

* Oil explorer Cairn India (CAIL.BO) rose 1.2 percent to
304.70 rupees as crude oil prices rose to near $75 per barrel.

MAIN TOP 3 BY VOLUME

* SpiceJet on 6.1 million shares

* Pantaloon Retail (PART.BO) on 1.8 million shares

* IFCI (IFCI.BO) on 1.6 million shares

FACTORS TO WATCH
* For technical analysis double click on www.reutersindia.net
* Indian rupee report
[INR/]
* Indian bond report
[IN/]
* Short-covering lifts euro, Aussie breaches barrier
[FRX/]
* Oil up toward $75 on economic recovery optimism, weaker
dollar [O/R]
* Asia stocks at 1-mth high; euro bounces
[MKTS/GLOB]
* Wall St climbs in late advance on chip makers
[.N]
* For closing rates of Indian ADRs
INADR

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India govt adviser-March inflation seen “pretty high”

April 13, 2010 By Leave a Comment

MUMBAI, April 12 (Reuters) – India’s March inflation will be “pretty high,” a top government adviser said on Monday.

Core inflation, excluding food and fuel prices, is around 5.5 percent currently, Kaushik Basu, chief economic adviser in the finance ministry, told reporters.

Wholesale price index-based inflation data for March is scheduled for release on Thursday.

Basu was speaking at an event organised by the Bombay Chamber of Commerce and Industry. (Reporting by Swati Bhat; Editing by Aradhana Aravindan)

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India to be fastest growing economy by 2018: Economist

March 16, 2010 By Leave a Comment

New Delhi, March 16 (IANS) India is the second largest growing economy after China, but it will overtake its neighbouring country by 2018, the Economist Intelligence Unit (EIU), the research arm of London-based Economist magazine, said Tuesday.

‘We forecast that India will overtake China as the fastest growing major economy by 2018. We expect India’s growth on an average of eight percent in the next five years,’ EIU senior analyst Anjalika Bardalai told reporters on the sidelines of 14th Business Roundtable here.

She said the Indian economy would grow at 6.8 percent during the current fiscal, at 7.7 percent in 2010-11, and 8 percent the year later.

But the statistical arm of the Indian government, the Central Statistical Organisation, has projected the economy to grow by 7.2 percent in the current fiscal.

‘Our growth projection is based on expenditures in the economy and is not based on factor cost as done by the Indian government,’ Bardalai explained.

The Indian government measures growth on the basis of factor cost. Factor cost is the cost of factors of production used to produce final goods and services.

India’s GDP during the three quarters in the current fiscal grew at 6.1 percent, 7.9 percent and 6 percent. While during 2008-09 it grew at 6.7 percent and in 2007-08 at 9.1 percent.

‘The GDP will not return back to 9 percent and more as it was during 2005-08. Also the monetary pressure may not go down as expected,’ The Economist executive editor Daniel Franklin said.

Driven by increasing food prices, India’s annual rate of inflation, based on the wholesale price index, rose to 9.89 percent in February from 8.56 percent in the previous month, according to an official data revealed Monday.

It also predicted inflow of investments through Foreign Institutional Investors (FII) at $75 billion by 2014.

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Sharad Pawar says end of season rains will help winter crops

September 19, 2009 By Leave a Comment

New Delhi, Sep 18 (ANI): Agriculture Minister Sharad Pawar has said that late end-season rains will help India’s winter crops.

Talking to reporters here on Thursday, Pawar said, “It’s true that because paddy area transplantation has been dropped, but the late rains are very helpful particularly for Punjab, Haryana, Orissa and Chhattisgarh.”

“There would not be any pressure on food grains supply, as the stock position was good,” Pawar added.

Meteorological Department has said that since June 1, monsoon rains have been 20 percent below normal and heavy showers in the past week have reduced the total seasonal deficit by three percentage points.

Met department said the country can expect heavy rains for at least another week, but the withdrawal of the monsoon, which usually begins to wind down in early September, would be delayed.

A surge in food prices unexpectedly pushed the annual change in India’s wholesale price index into positive for the first time since late May, putting pressure on the central bank to bring forward an exit from its easy monetary policy.

The annualised wholesale price index rose by an unexpected 0.12 percent in the year to September 5, compared with the previous week’s 0.12 percent fall and analysts’ forecast of a 0.08 percent decline.

The food articles sub-index rose an annual 15.4 percent, up from the previous week’s 14.8 percent rise, as a dry spell hit nearly half of India’s districts, hurting summer crops and prompting the government to take steps to raise supplies. (ANI)

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Moblies, digital cameras to feature in new WPI list

September 10, 2009 By Leave a Comment

New Delhi, Sep. 8 (ANI): Moblie phones and digital cameras are among the 300 new items, which would figure in the new Wholesale Price Index (WPI).

Over 30 items would be taken off the new inflation series, which is expected to be out by December. Existing series has many obsolete items. They will not figure in the new series. There will be 25-30 articles which you will not see in the new index we are compiling,” an official said.

Most of the addition would be in the manufacturing products category and the primary items, which consist of food grains and milk, would remain unchanged, the official added.

There could be minor changes in the fuel, power light and lubricant group.

With the addition of new items, data reporting would be more representative and give a better picture of the price situation, he said.

The base year for the new index will be 2004-05 while the WPI is presently calculated on 1993-94 base.

The Department of Industrial Policy and Promotion (DIPP), which brings out the inflation data, has started a trial run of the new index and data is being collected.

In the trail index, data for 1,100 items are being collected, which would be eventually consolidated to about 700 articles, the official said.

In the existing series, the weight of primary articles is 22.02 per cent while manufactured products contribute 63.75 per cent.

The weight of fuel, power, light and lubricants in the index is about 14 per cent. (ANI)

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Kolkatans worried over rise in prices of vegetables, fish

August 29, 2009 By Leave a Comment

Kolkata, Aug 28 (ANI): People of Kolkata are a worried lot as prices of vegetables and fish have increased in the city.

The vegetable vendors are selling potatoes at the rate of Rs.18 per kg which were earlier being sold at Rs.6. Earlier, prices of tomatoes were Rs.20 per kg but now they are being sold at Rs.30 per kg. The prices of other vegetables have also increased.

Vegetable sellers say that less production of vegetables have increased the price this year.

“The prices of vegetables were low earlier. But now the prices are increasing because of less production. There is a gap between supply and demand,” said Sahadeb Poira, a vegetable seller.

Residents say that prices of vegetables are becoming unaffordable for them.

“Here if I go to market for potatoes I have to pay 18 rupees more than that. And say now when you—-purchase 5 rupees or 6 rupees per kg now its three times therefore we can’t afford it,” said RN Chakraborty, a resident of Kolkata.

The prices of food grain, sugar and other items of daily needs have created an explosive situation in India because of weak monsoon and drought like situation.

Food prices surged an annual 13.3 percent in mid-August even as the overall wholesale price index fell, and the impact of a poor monsoon on inflation and the economy could prompt further government relief steps.

The prices of ‘Hilsa’ fish have also increased in the region. Sayeed Anwar Maqsood, secretary, Fish Importers Association says that prices have increased because of less procurement from neighbouring Bangladesh.

“The prices of Hilsa fish have gone up because of the fact there is a scarcity in the market. We fish importer association used to bring every year more than 5,000 metric ton of Hilsa fish. But then we are not able to bring fish this year from Bangladesh. The major reason is because fish availability in Bangladesh itself is very little,” said Maqsood.

Hilsa prices in Kolkata, as a result, have shot up substantially from 100-120 rupees (2.3- 2.7 US Dollars) a kilogram to 350-400 rupees (8.15- 9.31 US Dollars), putting the fish out of reach of middle class Bengalis. (ANI)

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Labour unions stage protest against price rise in Ludhiana

August 27, 2009 By Leave a Comment

Ludhiana, Aug 27 (ANI): Activists of labour unions took to the streets in Ludhiana protesting against spiraling prices.

The protest was organised jointly by the Northern Railway Men’s Union, the Kisan Sabha (Farmers Union), the Textile Mazdoor (Labour) Union and some other smaller unions.

Protestors said that the central government has failed to check rocketing prices of food grain and other basic commodities.

“The lentils we used to buy for Rupees 22-25 per kilogram is now selling at Rs. 70 a kilogram, vegetables like peas which were available for Rs. 5 per kilogram is now available at Rs. 85 per kilogram. We feel that our lawmakers are sitting idle after winning the election and not doing anything to check prices,” said Jagjit Singh, a protestor.

The prices of foodgrains, sugar and other items of daily need have risen due to weak monsoon and drought like situation.

Food prices surged an annual 13.3 percent in mid-August even as the overall wholesale price index fell, and the impact of a poor monsoon on inflation and the economy could prompt further government relief steps.

The widely watched wholesale price index fell 0.95 percent in the 12 months to August 15, its 11th successive fall. That compared with a 1.53 percent decline in the prior week and a market forecast for a decline of 1.41 percent.

The food articles index surged 13.3 percent from a year earlier as drought has hit nearly half of India’s districts, eroding crop production and raising major headaches for policy makers.

Last month, the central bank revised up its inflation forecast for the fiscal year ending March 2010 to five percent from four percent.

Officials have said mitigating the impact of the drought conditions is the government’s priority.

Prime Minister Dr. Manmohan Singh said this week that India was facing the prospect of a drought, and the government is planning a crackdown on hoarding of farm commodities and imposing limits of stock traders can keep. (ANI)

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Congress leaders discuss drought, price rise

August 19, 2009 By Leave a Comment

New Delhi, Aug 19 (ANI): The Congress Working Committee (CWC) met here on Wednesday to discuss the drought-like situation in many parts of the country and also the steep rise in the prices of essential commodities.

Prime Minister Manmohan Singh and Party president Sonia Gandhi attended the meeting and took part in the deliberations.

Earlier on Tuesday, Dr. Singh had stated that the country is threatened by the drought-like situation.

India’s vital monsoon rains have been 29 per cent below normal since the beginning of the June-September season, upsetting cultivation of crops such as rice and sugarcane and triggering a sharp rise in food prices.

On Monday, Agriculture Minister Sharad Pawar had said that the country needed to increase planting of winter-sown crops and improve irrigation to make up for the damage to farms.

Monsoon rains are vital for the country’s summer-sown crops such as rice, sugarcane and soybean because the majority of the farmers do not have access to irrigation facilities.

Although the widely watched wholesale price index fell an annual 1.74 per cent at the start of August, its ninth straight drop, prices of food items have been rising on a weekly basis.

In its July review, the Reserve Bank of India had revised its inflation forecast to around 5 per cent by the end of March 2010 from 4 per cent projected earlier.

Poor rainfall is expected to affect farm output and put upward pressure on inflation. (ANI)

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Inflation stands at -1.30%

July 2, 2009 By Leave a Comment

India`s benchmark wholesale price index (WPI), annual inflation stood at -1.30% for the week ended June 20, 2009 as compared -1.14% a week ago.

`Primary Articles` group having a weight of 22.02% in the benchmark WPI rose by 0.5% to 257.6 (Provisional) from 256.3 (Provisional) for the previous week.

The index for `Food Articles` group rose by 0.6% due to higher prices of fruits and vegetables (4%) and arhar (1%). However, the prices of fish-marine and tea (4% each) and jowar (3%) declined.

The index for `Non-Food Articles` group rose by 0.3% due to higher prices of fodder (4%) and groundnut seed (2%). However, the prices of raw wool (4%), raw silk and raw rubber (2% each) and copra and linseed (1% each) declined.

`Fuel, Power, Light & Lubricants` group having a weight of 14.23% in benchmark WPI index) rose by 0.1% to 327.9 (Provisional) from 327.5 (Provisional) for the previous week due to higher prices of naphtha (2%).

` Manufactured Products` group index having a weight of 63.75% rose by  0.05% .  The index for `Food Products` group rose marginally to 233.3 (Provisional) from 233.2 (Provisional) for the previous week due to higher prices of cakes & sweet roles (9%) and sugar (1%). However, the prices of rice bran oil (4%) and imported edible oil and cotton seed oil (2% each) declined.

The index for `Textiles` group rose by 0.3% to 143.1 (Provisional) from 142.7 (Provisional) for the previous week due to higher prices of hessian cloth (6%) and hessian & sacking bags (2%).

The index for `Paper & Paper Products` group rose by 0.5% due to higher prices of news paper (5%) and m.g. poster paper (1%).

The index for `Rubber & Plastic Products` group declined by 0.1% to 168.2 due to lower prices of pvc fitting & accessories (3%).

The index for `Chemicals & Chemical Products` group rose marginally due to higher prices of phenol (15%) and p.v.c. resins (5%).

The index for `Machinery & Machine Tools` group declined by 0.2% to due to lower prices of p.v.c. insulated cables (4%). However, the prices of hydraulic pumps (1%) moved up.

The index for `Transport Equipment & Parts` group declined by 0.1% due to marginal decline in the prices of other automobile spare parts.

Source – http://www.myiris.com/rss_index.php?fileR=2009/07/02/20090702123026198

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Inflation rate up to 0.26 percent

April 24, 2009 By Leave a Comment

New Delhi, Apr 23 (ANI): The rate of inflation in India for the week ended April 11 rose marginally to 0.26 percent, from 0.18 percent a week earlier, a government data showed on Thursday.

The inflation rate, as measured by the wholesale price index, was 7.95 per cent during the corresponding week of the previous year.

During the week, prices of raw food as a whole rose by 0.5 percent due to tea prices increasing by five percent, bajara by three percent, fruit and vegetables by two percent, and mutton and maize by one percent each.

Between April 11 and April 4, the wholesale price index rose 0.3 per cent to 228.8 from 228.2 the week before, as per the provisional data released by the Commerce and Industry Ministry.

Among the three main commodity groups, the index for manufactured products and primary articles rose 0.2 per cent and 0.5 per cent.

The index for fuel, power, light and lubricants remained unchanged at 322.6. (ANI)

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Inflation rate up to 0.26 percent

April 23, 2009 By Leave a Comment

New Delhi, Apr 23 (ANI): The rate of inflation in India for the week ended April 11 rose marginally to 0.26 percent, from 0.18 percent a week earlier, a government data showed on Thursday.

The inflation rate, as measured by the wholesale price index, was 7.95 per cent during the corresponding week of the previous year.

During the week, prices of raw food as a whole rose by 0.5 percent due to tea prices increasing by five percent, bajara by three percent, fruit and vegetables by two percent, and mutton and maize by one percent each.

Between April 11 and April 4, the wholesale price index rose 0.3 per cent to 228.8 from 228.2 the week before, as per the provisional data released by the Commerce and Industry Ministry.

Among the three main commodity groups, the index for manufactured products and primary articles rose 0.2 per cent and 0.5 per cent.

The index for fuel, power, light and lubricants remained unchanged at 322.6. (ANI)

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Sensex Ends 61.52 Pts Up; Nifty Closes On A Flat Note

April 10, 2009 By Leave a Comment

The Sensex closed the choppy day on a positive note led by realty, metal, banking and consumer durables stocks.

It belled the day strongly after gaining 133.81 points at 10,876.15 on Thursday. But after few minutes of trading, it fell into the pessimistic zone because of profit booking.

The markets remained volatile allthrough the day.

The inflationary and IIP data was also announced during the noon trades. The benchmark index Sensex hit an intraday high of 10,932.12 and intraday low of 10,655.96.

For the week ended Mar 28, 2009, the country’s benchmark wholesale price index (WPI), inflation fell marginally to 0.26% as against 0.31% during the last ago.

Index for industrial production (IIP) also posted a negative growth of 1.2% during Feb 2009 as against positive growth of 0.4% (revised) during the previous month in spite of stimulus packages declared by the administration.

Secondline stocks maked their closures on a firm note.

BSE Midcap and Smallcap index gained 1.69% and 1.66% respectively.

Amongst the sectoral indices, BSE Realty gained 5.42%, Metal zoomed 3.72% Bankex and Consumer durables grew more than 2% each, while FMCG went down 1.36%.

European stocks gained as chemical makers and insurance companies gained. FTSE 100 gained 11.31 points, or 0.29%, to trade at 3,936.83, CAC 40 went up 8.57 points, or 0.29%, to trade at 2,929.63 and DAX climbed 49.61 points, or 1.14%, to trade at 4,407.53. (4.10 p.m., IST).

Finally, the Sensex closed the day after making a gain of 61.52 points at 10,803.86. The broad-based NSE Nifty fell 0.90 points at 3,342.05 after touching an intraday high of 3,401.15 and an intraday low of 3,307.05.

The top gainers in the 30-share index were Tata Steel (7.71%), Jaiprakash Associates (7.40%), Reliance Energy (5.66%), ICICI Bank (5.62%), DLF (4.83%), and Sterlite Industries (India) (3.15%).

On the other hand, the major losers in the Sensex were Hindustan Unilever (3.26%), Mahindra and Mahindra (3.15%), Wipro (2.80%), Oil and Natural Gas Corporation (2.42%), NTPC (1.30%), and Bharat Heavy Electricals (1.28%).

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Inflation rate in India drops to a thirty-year low of 2.43 per cent

April 9, 2009 By Leave a Comment

New Delhi, Apr 9 (ANI): The rate of inflation in India for the week ended March 28 fell to historic low of 0.26 percent, from 0.31 percent a week earlier, government data showed on Thursday.

The inflation rate, which has been recorded as the lowest ever, in more than three decades, has increased the expectation of rate cuts by the Reserve Bank of India (RBI).

The fall in the wholesale price index is mainly attributed to a fall in prices of mineral products and food items.

During the week, prices of fire clay went down by 19 per cent. This led to a decline in the minerals group by a whopping 11.8 per cent.

Prices of iron ore and chromite fell by 14 percent and two percent respectively.

Moreover, prices of some food items like tea have declined.

However, the fuel index remained unchanged at its previous week’s level of 320.9.

On the other hand, manufactured items like imported edible oil were dearer by six per cent, benzene by 14 per cent, and enamelled copper wires by 9 per cent. (ANI)

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India’s inflation rises marginally to 0.31 percent

April 3, 2009 By Leave a Comment

New Delhi, April 2 (IANS) India’s annual rate of inflation rose marginally to 0.31 percent for the week ended March 21, after declining for eight consecutive weeks, official data showed Thursday. The inflation rate was 0.27 percent the week before.

The marginal rise was mainly on account of a rise in the official wholesale price index compared to the corresponding week of last year. Between March 14 and 21, the index rose 0.1 percent, data released by the commerce and industry ministry showed.

Among the three main commodity groups, the index for manufactured products rose 0.2 percent, while that for primary articles registered a small increase. The index for fuel, however, declined marginally to 320.9 (provisional) from 321.0 (provisional) for the previous week due to lower prices of furnace oil.

Economists, who have already warned of a deflation in the Indian economy, explain that lower inflation rate does not necessarily mean that prices have fallen. Lower inflation rate only means the rate of rise in prices has come down, not the actual prices.

Deflation is a decline in the general price level. It is caused by factors such as low money supply and credit, and a curb in spending by households, industry or government. The lower demand during deflation often leads to a rise in unemployment.

Dalip Kumar, the head of projects at the National Council of Applied Economic Research (NCAER), a Delhi-based think tank, said the inflation figures would now continue to rise and would increase by at least one more percent by the month-end.

‘The cost of food commodities and fruits has gone up. Being an off-season for fruits and vegetables, there is a shortage of these products. This would lead to minor rise in inflation,’ said Kumar.

However, D.K. Joshi, principal economist at credit rating agency Crisil Ltd, said the economy would see inflation going below zero in the next two-three weeks.

Joshi was of the view that the prices of food commodities during the corresponding period last year also went up but the inflation continued to decline. ‘The prices are correcting very sharply,’ Joshi said.

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Inflation rises marginally to 0.31 percent

April 3, 2009 By Leave a Comment

New Delhi, April 2 (IANS) India’s annual rate of inflation rose marginally to 0.31 percent for the week ended March 21, after declining for eight consecutive weeks, official data showed Thursday. The inflation rate was 0.27 percent the week before.

The marginal rise was mainly on account of a rise in the official wholesale price index compared to the corresponding week of last year. Between March 14 and 21, the index rose 0.1 percent, data released by the commerce and industry ministry showed.

Among the three main commodity groups, the index for manufactured products rose 0.2 percent, while that for primary articles registered a small increase. The index for fuel, however, declined marginally to 320.9 (provisional) from 321.0 (provisional) for the previous week due to lower prices of furnace oil.

Economists, who have already warned of a deflation in the Indian economy, explain that lower inflation rate does not necessarily mean that prices have fallen. Lower inflation rate only means the rate of rise in prices has come down, not the actual prices.

Deflation is a decline in the general price level. It is caused by factors such as low money supply and credit, and a curb in spending by households, industry or government. The lower demand during deflation often leads to a rise in unemployment.

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Inflation near zero leaves room for rate cut

April 3, 2009 By Leave a Comment

India’s annual inflation rate hovered above zero in mid-March and analysts said they expect it to turn negative in the next couple of weeks, providing enough room to the central bank to further ease monetary policy.

The wholesale price index, India’s most widely watched inflation measure, rose 0.31 percent in the 12 months to March. 21, basically steady with the previous week’s 0.27 percent and slightly above a forecast of 0.18 percent in a Reuters poll.

“Inflation will go into the negative territory in mid-April and we are looking at a 5-6 month period of negative inflation,” said Abheek Barua, chief economist at HDFC Bank.

“It will bottom out in July and turn positive in November or December. This gives RBI more room to ease up monetary policy.”

The bond market and rupee showed little reaction to the data, while an already strong stock market extended gains of 4 percent to more than 5 percent.

Atsi Sheth, chief economist at Reliance Equities, said the the slowing in the rapid decline in the inflation rate was good news for growth, showing that while demand was declining it was not plummeting.

ROOM FOR CUTS?

Prime Minister Manmohan Singh has said plenty of liquidity and low inflation offered room for further interest rate cuts.

Growth in Asia’s third-largest economy is expected to have slowed to about 7 percent in 2008-09 from rates of 9 percent or more in the three previous years, as the global slowdown hit.

The central bank has cut its main short-term lending rate by 400 basis points in five moves since October, and the central bank has called on banks to pass the lower rates on to customers.

Manufacturing activity contracted for a fifth straight month in March and exports fell sharply in February, and Reserve Bank of India governor Duvvuri Subbarao last week said that stemming the slowdown was the current policy challenge.

Subbarao also said there was no concern about India falling into a deflationary cycle. The consumer price index, which is released monthly, rose an annual 9.63 percent in February.

And with food prices high and liquidity in money markets improving, not all economists saw a rate cut as imminent.

“The central bank is not likely to touch key rates in the next policy (review) as liquidity has improved significantly and also banks’ lending rates to consumers and corporates have softened to the extent possible,” said Rupa Rege Nitsure, chief economist at Bank of Baroda in Mumbai.

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