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Monday, December 14, 2009

Inflation grew 4.78% in November 2009

Lower supply boost up the prices 

India's headline inflation has grown significantly at 4.78% in November 2009 compared with November 2008. The higher food prices added stress on overall inflation rate. The annual rate of inflation, based on monthly WPI, stood at 1.34% for October 2009.

The official Wholesale Price Index for all commodities for the month of November 2009 rose by 1.3 % to 245.4 from 242.2 last month.

The significant growth on month on month basis has added pressure on price stability. The prices of essential commodities grew significantly due to the lower supply. Build up inflation in the financial year so far was 7.54% compared to a build up of 3.86% in the corresponding period of the previous year. The index of primary articles rose by 2.6 % to 280.6 from 273.4 last month.

The index for 'Food Articles' group rose by 3.2% to 287.1 (Provisional) from 278.2 (Provisional) for the previous month due to higher prices of urad (24%), moong (14%), poultry chicken (10%), eggs (8%), fish-inland (7%), wheat, bajra and arhar (6% each), mutton and condiments & spices (5% each), gram, fruits & vegetables and pork (3% each), masur and milk (2% each) and rice, barley and tea (1% each). However, the prices of fish-marine (2%) and jowar (1%) declined. The index for 'Non-Food Articles' group rose by 1.6% to 240.1 (Provisional) from 236.4 (Provisional) for the previous month due to higher prices of fodder (10%), raw jute (8%), raw silk and raw rubber (6% each), raw cotton (5%), groundnut seed (3%) and copra, gingelly seed and castor seed (2% each). However, the prices of sunflower and soyabean (4% each), raw wool, niger seed and tobacco (3% each) castor seed (2%) and cotton seed (1%) declined.

However on other hand the index for fuel and power declined marginally to 344.9 from 345.0 for the previous month due to lower prices of light diesel oil (3%) and naphtha (2%). However, the prices of aviation turbine fuel (11%) moved up.

The major index of manufactured product rose by 1.2% during the month. The index for 'Food Products' group rose by 4.7% to 251.4 (Provisional) from 240.1 (Provisional) for the previous month due to higher prices of skimmed milk powder (15%), oil cakes (12%), coffee powder and sugar (6% each), bran (all kinds) (5%), rice bran oil and imported edible oil (4% each), groundnut oil and khandsari (3% each), butter, cotton seed oil and atta (2% each) and maida, sooji (rawa), ghee, coconut oil and baby food (all kinds) (1% each). However, the prices of gingelly oil (3%) and unrefined oil and gur (1% each) declined.

The index for 'Chemicals & Chemical Products' group rose by 0.1% to 229.9 (Provisional) from 229.7 (Provisional) for the previous month due to higher prices of calcium ammonium nitrate n-content and carbon black (3% each), monocrotophos (2%) and tooth paste, acid (all kinds), caustic soda (sodium hydroxide), oxygen and liquid chlorine (1% each). However, the prices of purified terephthalic acid (pta) (5%), methanol and ampicillin trihydrate (4% each), benzene (3%), endosulfan (2%) and p.v.c. resins (1%) declined.

The RBI has projected 6.5% inflation for March 2010 ended however in November 2009 inflation attained 5% mark. The more then expected growth rate in inflation will force RBI to take immediate policy action.
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