Constant fall for nine consecutive weeks
The official Wholesale Price Index for - All Commodities' (Base: 1993-94 = 100) for the week ended 27th December 2008 declined by 0.3 % to 229.5 from 230.2 for the previous week.
The annual rate of inflation, calculated on point-to-point basis, stood at 5.91 % for the week ended 27 December 2008 over 29 December 2007 as compared to 6.38 % for the previous week and 3.83 % during the corresponding week of the previous year.
The movement of the index for the various commodity groups is summarized below: -
PRIMARY ARTICLES (Weight 22.02%) - The index for this major group declined by 0.5 % to 247.5 from 248.8 for the previous week. The groups and items for which the index showed variations during the week are as follows: -
The index for 'Food Articles' group declined by 0.7 % to 240.8 from 242.6 for the previous week due to lower prices of jowar (5%), fruits & vegetables (3%) and eggs and bajra (1% each). However, the prices of urad (1%) moved up.
The index for 'Non-Food Articles' group declined marginally to 236.0 from 236.1 for the previous week due to lower prices of sunflower (8%). However, the prices of raw rubber (10%) and raw silk (5%) moved up.
The annual rate of inflation, calculated on point-to-point basis, for 'Primary Articles' stood at 11.59 % for the week ended 27 December 2008 as compared to 12.07 % in the previous week.
The annual rate of inflation for 'Food Articles' stood at 9.95 % for the week ended 27 December 2008 as compared to 10.52 % in the previous week. It was 1.77 % as on 29 December 2007 i.e. a year ago.
FUEL, POWER, LIGHT & LUBRICANTS (Weight 14.23%) - The index for this major group remained unchanged at its previous week's level of 330.5
MANUFACTURED PRODUCTS (Weight 63.75%) - The index for this major group declined by 0.3 % to 200.8 from 201.4 for the previous week. The groups and items for which the index showed variations during the week are as follows: -
The index for 'Food Products' group rose by 0.3 % to 200.1 from 199.6 for the previous week due to higher prices of unrefined oil (14%), khandsari (2%) and groundnut oil and gur (1% each). However, the prices of rice bran oil and imported edible oil (1% each) declined.
The index for 'Textiles' group declined by 0.1 % to 141.1 from 141.2 for the previous week due to lower prices of polyster staple fibre (2%).
The index for 'Paper & Paper Products' group declined by 0.2 % to 205.9 from 206.3 for the previous week due to lower prices of newsprint (1%).
The index for 'Chemicals & Chemical Products' group declined by 1.3 % to 217.2 (Provisional) from 220.0 (Provisional) for the previous week due to lower prices of acid (all kinds) (27%), acetylene (4%) and oxygen (1%). However, the prices of caustic soda (sodium hydroxide) (1%) moved up.
The index for 'Machinery & Machine Tools' group declined by 0.8 % to 175.5 from 176.9 for the previous week due to lower prices of enamelled copper wires (28%).
Outlook - The wholesale price index (WPI) plunge to 5.9% for the week ended 27 December 2008 compared with 6.38% in a previous week. This is the nine consecutive weeks where WPI remain in single digit territory. Overall slowdown in commodity cycle resulted in lower price level week by week. Recently RBI has cut rate of inertest across the board and inject liquidity in the market, resulted in lower yield on bond . The apex bank of India has already cut cash reserve ratio by 400bps (from 9% to 5%), repo by 350bps (from 9% to 5.5%) and reverse repo by 200bps (6% to 4%). The total amount of liquidity released due to these cuts is around Rs3.2trillion.
To sum up , recent inflation numbers has played supportive role for the apex bank of the country and providing space to focus more on growth trajectory.
source: Capital Market
