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Thursday, August 20, 2009

Inflation at -1.53%

Lower rainfall will fuel the inflation

The official Wholesale Price Index for all commodities for the week ended 8 August 2009 rose by 0.1 % to 237.4 from 237.2 for the previous week. The annual rate of inflation, calculated on point to point basis, stood at -1.53 % for the week ended 08 August 2009 as compared to -1.74 % for the previous week and 12.82% during the corresponding week of the previous year.

The index of Primary articles rose by 0.2% to 262.9 from 262.5 for the previous week. Among which the index for food articles group rose by 0.2% to 262.0 from 261.4 for the previous week due to higher prices of bajra and urad (2% each) and condiments & spices, arhar and fruits & vegetables (1% each). However, the index for non-food articles group declined by 0.1% to 241.4 from 241.6 for the previous week due to lower prices of raw silk (2%).

The index for fuel power light and lubricant group declined marginally to 338.2 from 338.3 for the previous week due to lower prices of light diesel oil (2%) and naphtha (1%). However the prices of bitumen (1%) moved up.

The index of manufactured product grew 0.1% to 206.1 due to increased in food product, chemicals and chemical products, basic metals alloys and metal products, machinery and machine tools. The index for food products group rose by 0.4 % to 232.5 from 231.6 for the previous week due to higher prices of khandsari and rice bran oil (3% each), imported edible oil, sooji (rawa) and cotton seed oil (2% each) and maida, ghee and oil cakes (1% each). The index for chemicals and chemical products group also rose marginally to 227.5 from 227.4 for the previous week due to higher prices of liquid chlorine (11%) and acid (all kinds) (2%). However index for textiles group declined by 0.1 % to 143.7 from 143.9 for the previous week due to lower prices of hessian cloth (3%).

The wholesale price index has remained negative for tenth consecutive week. However constant growth in food articles is adding pressure on general price level. On other hand lower rainfall will fuel inflation in long term. The IMD has revised rainfall estimates for the year 2009-10, the worst since 2002, bringing it below the drought threshold. The uncertainty about the monsoon will craft a concern for agriculture production. The agriculture contributes 15-16% in GDP, therefore decline in agri production will adversely affects the first quarter GDP. The first quarter GDP data will be release on 31 August 2009.

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