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Thursday, September 24, 2009

Inflation up for six consecutive weeks

Upbeat will continue

The official Wholesale Price Index for all commodities for the week ended 12 September 2009 rose by 0.2% to 242.6 from 242.0 for the previous week.The annual rate of inflation, calculated on point to point basis, stood at 0.37% for the week ended 12 September 2009 as compared to 0.12% for the previous week and 12.42 percent during the corresponding week of the previous year. Build up inflation in the financial year so far was 6.12% compared to a build up of 6.62% in the corresponding period of the previous year.

The index of primary article rose 0.2% to 275.3 from 274.7 for the previous week. The index for food articles group rose 0.1 % to 280.3 from 279.9 for the previous week due to higher prices of fish-inland (11%), mutton (2%) and condiments & spices, maize and wheat (1% each). However, the prices of fish-marine (8%), arhar (2%) and fruits & vegetables, bajra and gram (1% each) declined. The index for non-food articles group also rose 0.5 % to 239.8 from 238.7 for the previous week due to higher prices of groundnut seed (6%), gingelly seed and fodder (2% each) and raw silk and soyabean (1% each).

The index of fuel, power, light and lubricant group rose marginally to 343.5 from 343.4 for the previous week due to higher prices of furnace oil (1%).

The index of manufactured group rose 0.3% to 208.8 from 208.1for the previous week. Among the sub groups, the index for basic metals alloys and metal products, machinery and machine tools rose from there previous week level. The index for basic metals alloys and metal products group rose 2.1% to 260.6 from 255.2 for the previous week due to higher prices of skelps (8%), bars & rods (7%), cr coils (6%), oromild steel & tensile plates, lead ingots and cr sheets (4% each), wire (all kinds), billets & slabs, angles, channels & sections, blooms and zinc (3% each) and zinc ingots (2%). The index for machinery and machine tools group rose 0.5% to 173.3 from 172.4 for the previous week due to higher prices of other cables (11%), rubber insulated cables (7%), carding machine (4%), p.v.c. insulated cables and enameled copper wires (3% each) and other textile machinery (2%).

On the other hand index of food product group declined 0.1% to 241.7 from 241.9 for the previous week due to lower prices of rice bran oil (4%), oil cakes and imported edible oil (2% each). The index for chemicals and chemical product group also group declined 0.1 percent to 229.1 from 229.3 for the previous week due to lower prices of caustic soda (Sodium hydroxide) and purified terephthalic acid (pta) (3% each).

The rise in inflation level indicates that WPI has come out from a statistical negative zone. The week on week acceleration in the inflation amid with the poor monsoon expectations raise the concern about the growing food prices. However the government can hold on rise in food prices by use of procurement stock, ban on exported commodity and import the needed commodity.

Meanwhile the rainfall deficit in the current South West Monsoon narrowed down from whopping 54% shortfall upto 24 June 2009 to a low of 20% shortfall up to 9 September 2009. Instead, the shortfall increased slightly to 21% upto 16 September 2009. In addition to this the area sown to kharif crops in 2009 season increased 3.1% to 930.53 lakh ha as on 17 September 2009 from 902.5 lakh ha in the previous week. However, the shortfall in area sown kharif crops in the current season over last season has narrowed from subsequently from 8.2% on 28 August to 4.7% in the week ended 17 September 2009. The improvement in water reservoir level is a cause for cheer, in these times of gloom for the farmers. All this raise the hope for better Rabi season which assist to curtail the price pressure on food articles.

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