RBI forecast's 5% by end March 2010
The annual rate of inflation, calculated on point-to-point basis, stood at -1.54% for the week ended 18 July 2009 compared with 19 July 2008. India's WPI is constantly moving in negative zone, thanks to the higher base effect. However the trend is expected to reverse in near term with lower base effect setting in.
The index for primary article rose by 0.3% to 261.1 from 260.3 for the previous week. In primary article index, 'Food Articles' group index rose by 1.2% to 259.0 from 255.9 for the previous week due to higher prices of mutton (14%), arhar (9%), gram (4%), moong, jowar, fruits & vegetables and masur (3% each), bajra and urad (2% each) and maize and ragi (1% each). However, the prices of condiments & spices (1%) declined.
The index for 'Non-Food Articles' group rose by 1.7% to 242.5 from 238.4 for the previous week due to higher prices of logs & timber (35%), copra (3%), raw silk (2%) and rape & mustard seed, raw cotton and gingelly seed (1% each). However, the prices of sunflower (1%) declined.
The index for 'Minerals' group declined by 16.8% to 561.7 from 675.4 for the previous week due to lower prices of iron ore (24%) and felspar (3%). However, the prices of vermiculite (86%), manganese ore (77%), silica sand (4%) and barytes (2%) moved up.
The index for fuel and power declined by 0.1% to 338.2 from 338.4 for the previous week due to lower prices of aviation turbine fuel (7%).
The index for manufactured group declined by 0.1% to 205.7 from 205.9 for the previous week. The index for 'Food Products' group declined by 0.4% to 232.1 from 233.0 for the previous week due to lower prices of oil cakes (3%) and cotton seed oil (1%). However, the prices of imported edible oil (4%) and rice bran oil, coconut oil, sugar, butter, ghee and gur (1% each) moved up.
The index for 'Beverages Tobacco & Tobacco Products' group rose marginally to 304.4 from 304.3 for the previous week due to higher prices of soft drinks (all kinds) (1%).
The index for 'Textiles' group declined by 0.2% to 143.4 from 143.7 for the previous week due to lower prices of hessian cloth (3%) and hessian & sacking bags (2%).
The index for 'Chemicals & Chemical Products' group rose marginally to 227.1 from 227.0 for the previous week due to higher prices of acid (all kinds) (1%).
The index for 'Non-Metallic Mineral Products' group declined by 0.1% to 222.5 from 222.8 for the previous week due to marginal decline in the prices of cement.
The index for 'Basic Metals Alloys & Metal Products' group rose marginally to 255.1 from 255.0 for the previous week due to higher prices of foundry pig iron and basic pig iron (1% each). However, the prices of other iron steel, steel ingots and lead ingots (1% each) declined.
The WPI inflation turned negative in June 2009 due to the statistical base effect and not because of any contraction in demand. Within WPI, inflation of primary articles, particularly food articles, are continuously rising, recording a growth of 8.57% in June 2009 over 5.94% in June 2008. Moreover consumer price indices (CPIs) are at elevated levels, indeed have also hardened in recent months.
Growing demand and concern on supply has resulted into higher prices of essential commodities. This has again raised the expectations of rise in inflation. In recent policy review, RBI has projected 5% inflation for end, March 2010 that is higher then 4% projected in the Annual Policy meet on 21 April 2009.
Moving further, the rising commodity prices globally and the uncertain monsoon outlook could further accentuate food price inflation.
