Higher food prices still remain a cause of concern
The official Wholesale Price Index for ‘All
Commodities' (Base: 1993-94 = 100) for the week ended 26 September,
2009 decelerated by 0.1% to 243.0 from 243.3 for the previous week. The
annual rate of inflation, calculated on point to point basis, stood at
0.70% (Provisional) for the week ended 26 September 2009 as compared to
0.83% for the previous week ended 19 September 2009 and 12.08% during
the week ended 27 September 2008.
Build up inflation in the financial year so far was 6.30% compared to a
build up of 6.44% in the corresponding period of the previous year. 52
week average inflation for the week ended 26 September 2009 was 2.84%.
Among all, the index of primary articles recorded growth on week on
week basis however fuel and manufactured product index recorded fall
during the week ended 26 September 2009 compared with last week.
The index of primary articles grew by 0.1% during the week ended 26
September 2009. Food and non food articles are two main pillars in the
index of primary articles. The index for ‘Food Articles' group declined
by 0.2 % to 281.7 from 282.2 for the previous week due to lower prices
of poultry chicken (3%) and bajra, fruits & vegetables, condiments
& spices and arhar (1% each). However, the prices of tea (2%) and
maize and eggs (1% each) moved up.
The index for ‘Non-Food Articles' group rose by 0.2 % to 239.9 from
239.5 for the previous week due to higher prices of groundnut seed
(3%). However, the prices of gingelly seed (9%) and rape & mustard
seed (1%) declined.
The index of fuel and power declined by 0.1% to 345.6 from 345.8 for the previous week due to lower prices of bitumen (2%).
The index of manufactured index declined by 0.2% to 208.5 from 209.0
for the previous week. The index for ‘Food Products' group declined by
1.3 % to 238.1 from 241.2 for the previous week due to lower prices of
oil cakes (5%), imported edible oil (2%) and sugar, malted food,
coconut oil and groundnut oil (1% each). However, the prices of gur
(3%), salt (2%) and butter (1%) moved up.
The index for ‘Textiles' group rose by 0.3 % to 144.7 from 144.3 for
the previous week due to higher prices of hessian & sacking bags
and hessian cloth (4% each).The index for ‘Chemicals & Chemical
Products' group rose marginally to 229.7 from 229.6 for the previous
week due to higher prices of methanol (9%). However, the prices of
p.v.c. resins (4%) declined.
On week on week basis, inflation decelerated however constant growth in
food articles adds concern for policymakers as well as for consumers.
The RBI governor also has strong concern for growing inflation and
higher price of essential commodities like food and vegetables. On
Monday 5 October 2009, RBI governor has delivered speech on Emerging
Market seminar in Istanbul, where he said, "although inflation
pressures emanating from higher food prices may limit the scope for
monetary policy action, there are implications for inflation
expectations. In view of the country specific features, we may need to
exit from accommodative monetary policy earlier than advanced
economies".
"This calls for careful management of trade-offs: growth concerns
warrant a delayed exit, but inflation concerns call for an earlier
exit. An early exit on inflation concerns runs the risk of derailing
the fragile growth, while a delayed exit may engender inflation
expectations", he added.
