Growth across the board
The official Wholesale Price Index for 'All Commodities' (Base: 1993-94
= 100) for the month of May, 2010 rose by 1.7 % to 258.1 from 253.7 for
the previous month.
The annual rate of inflation, based on monthly WPI, stood at 10.16% for
the month of May, 2010 (over May, 2009) as compared to 9.59 % for the
previous month and 1.38% during the corresponding month of the previous
year. Build up inflation in the financial year so far was 1.85%
compared to a build up of 2.67% in the corresponding period of the
previous year.
The index of primary articles group rose by 3.5% to 299.9 from 289.7
for the previous month. The index for 'Food Articles' group rose by
0.8% to 294.6 from 292.4 for the previous month due to higher prices of
tea (21%), urad (5%), fish-marine (4%), moong, condiments & spices
and mutton (3% each), poultry chicken, fruits & vegetables, arhar,
fish-inland and beef & buffalo meat (2% each) and gram (1%).
However, the prices of wheat (3%), coffee, jowar, barley and masur (2%
each) and maize and ragi (1% each) declined.
The index for ‘Non-Food Articles' group rose by 10.5% to 283.1 from
256.1 for the previous month due to higher prices of sugarcane (50%),
castor seed and raw silk (5% each), logs & timber (4%), raw cotton
(3%), sunflower and copra (2% each) and raw jute, groundnut seed and
mesta (1% each). However, the prices of fodder (10%), tobacco (2%) and
niger seed, linseed, raw rubber, gingelly seed and cotton seed (1%
each) declined.
The index for 'Minerals' group rose by 8.4% to 682.2 from 629.2 for the
previous month due to higher prices of feldspar (10%), asbestos (8%)
and steatite and chromite (6% each).
However, the prices of magnesite
(18%), barytes (9%) and vermiculite (6%) declined.
The index of fuel and power group rose by 1.2% to 368.2 from 364.0 for
the previous month due to higher prices of lubricants (5%), aviation
turbine fuel and electricity (3% each), liquefied petroleum gas (2%)
and light diesel oil and furnace oil (1% each). However, the prices of
bitumen (1%) declined.
If the petrol, diesel and domestic LPG gas prices are hiked, it
will lead to spike in the index of fuel and power group. Likewise,
administered price mechanism (APM) gas prices were more than doubled,
as it is not part of the WPI commodity list, hike in prices thereof did
not impact WPI. But the second level pass through, in terms of increase
in electricity or (gas based) steel product prices or some of the
decontrolled fertilizer can happen any soon. This impact is yet to be
felt in the WPI. Meanwhile, if politics overtakes economics, and the
government continues to defer the hike in fuel prices, then we can see
moderation in the index of fuel and power group for June 2010.
The index for manufactured product group rose by 1.2% to 219.1 from 216.6 for the previous month.
The index for 'Food Products' group declined by 1.1% to 246.4 from
249.1 for the previous month due to lower prices of sugar and oil cakes
(3% each), khandsari and salt (2% each) and rape & mustard oil,
bran (all kinds), sooji (rawa), unrefined oil and cotton seed oil (1%
each). However, the prices of atta and maida (4% each), cakes &
sweet rolls and malted food (3% each), gur, imported edible oil,
groundnut oil and biscuits (2% each) and ghee (1%) moved up.
The index for 'Beverages Tobacco & Tobacco Products' group rose by
1.3 %to 324.3 from 320.1 for the previous month due to higher prices of
bidi (7%). However, the prices of rectified spirit (1%) declined.
The index for 'Textiles' group rose by 3.0% to 163.0 from 158.2 for the
previous month due to higher prices of cotton grey drills & jeans
and terry cotton shirting (11% each), cotton knitted garments and
cotton grey cloth (others) (10% each), polyester yarn (8%), cotton
yarn-hanks (7%), synthetic yarn (5%), other cotton yarn (4%), dhoties,
sarees & voils and polyester staple fibre (3% each), woollen cloth,
woollen yarn and nylon filament yarn (2% each) and cotton yarn-cones
and viscose filament yarn (1% each). However, the prices of texturised
yarn (8%) and hessian cloth (4%) declined.
The index for 'Wood & Wood Products' group rose by 8.8 %to 258.5
from 237.6 for the previous month due to higher prices of plywood
commercial planks (19%).The index for 'Paper & Paper Products'
group rose by 0.7 %to 207.3 from 205.9) for the previous month due to
higher prices of newsprint (4%) and kraft paper and m.g. poster paper
(1% each).The index for 'Leather & Leather Products' group rose by
1.0 %to 166.0 from 164.4 for the previous month due to higher prices of
footwear western type (1%).
The index for 'Rubber & Plastic Products' group rose by 1.1 %to
177.9 from 175.9 for the previous month due to higher prices of cycle
tubes (5%), giant tubes (3%) and giant tyres, tractor tyres and motor
tyres (1% each). However, the prices of pvc fitting & accessories
(2%) declined.
The index for 'Chemicals & Chemical Products' group rose by 1.6 %to
236.5 from 232.8 for the previous month due to higher prices of carbon
black (21%), urea n_content (6%), calcium ammonium nitrate n-content
and di_ammonium phosphate n-content (5% each), complex fertilizers-npk
content and endosulfan (4% each), hair oil, liquid chlorine, liquid
oral other than vitamins and benzene (3% each), acid (all kinds),
varnishes, caustic soda and polystyrene (2% each) and oxygen, titanium
dioxide, resins (all kinds), enamels, soda ash and monocrotophos (1%
each). However, the prices of other fertilizers (4%), ammonium sulphate
n_content (2%) and complex fertilizer n_content and purified
terephthalic acid (pta) (1% each) declined.
The index for 'Non-Metallic Mineral Products' group declined by 0.5 %to
225.9 from 227.0 for the previous month due to lower prices of cement
(1%). However, the price of asbestos cement corrugated sheets (1%)
moved up.
The index for 'Basic Metals Alloys & Metal Products' group rose by
3.4 %to 285.8 from 276.5 for the previous month due to higher prices of
alloy stainless steel (26%), steel sheets, plates & strips (14%),
ms bars & rounds (10%), nickel alloy (9%), other iron steel, basic
pig iron, foundry pig iron and alloy steel casting (8% each), blooms
and billets & slabs (7% each), skelps and pipes & tubes (5%
each), wire (all kinds), oromild steel & tensile plates and cr
coils (4% each), bars & rods and cr sheets (3% each), steel wire
and angles, channels & sections (2% each) and cast iron spun pipes
and bolts & nuts (1% each). However, the prices of steel ingots
(8%) and lead ingots and zinc ingots (6% each) declined.
The index for 'Transport Equipment & Parts' group rose by 0.8 %to
178.1 from 176.6 for the previous month due to higher prices of broad
gauge passenger carriage (13%), broad gauge other coaching vehicles
(6%), crank shafts (2%) and bus chassis (diesel), truck chassis
(diesel), bicycles and other automobile spare parts (1% each).
Growth in inflation in May 2010 was across the board. Rise in primary
articles was powered by hardening prices of essential commodities like
food and vegetables. On other hand, the index of fuel and power as well
as the index of manufactured product recorded growth in price index.
The double digit growth rate in inflation added concern for RBI as it
is resulted in unstable price level.
