Food articles inflation moves into single digit after 13 months
The index for primary articles group rose by 0.4% to 308.8 (Provisional)
during the week ended 17 July 2010 from 307.5 (Provisional) for the
previous week.
The annual rate of inflation, calculated on point to point basis, stood
at 14.50% (Provisional) for the week ended 17 July 2010 compared with
16.48% last week and 8.18% during the week 18 July 2009. However, this
was the lowest pace of annual rise since 13.1% growth recorded in the
week ended 14 November 2009.
The index for 'Food Articles' group rose by 0.6% to 299.3 (Provisional)
from 297.6 (Provisional) for the previous week due to higher prices of
fish-marine (3%), gram and milk (2% each) and mutton, urad, wheat, tea
and maize (1% each). Meanwhile, the prices of fish-inland and rice (1%
each) declined. The annual rate of food inflation eased to 13 months low
of 9.7% in the week ended 17 July 2010.
The index for 'Non-Food Articles' group rose by 0.2% to 288.6
(Provisional) from 288.1 (Provisional) for the previous week due to
higher prices of rape & mustard seed and sunflower (2% each) and raw
silk, raw jute, groundnut seed and copra (1% each). However, the
prices of raw cotton (1%) declined.
The index for fuel and power group declined by 0.1% to 386.3
(Provisional) from 386.7 (Provisional) for the previous week due to
lower prices of naphtha, light diesel oil and furnace oil (1% each).
The annual rate of inflation, calculated on point to point basis stood
at 14.29% (Provisional) for the week ended 17 July 2010 over 14.27% last
week and (-) 10.63% during 18 July 2009.
Reserve Bank of India (RBI) has announced the first quarter review of
Annual Monetary Policy Statement for 2010-11. The most of the
moves/action from the RBI were in line with expectations, except more
aggressive hike in reverse repo rate. RBI raised the repo rate, the rate
at which it lends short term funds to scheduled banks, by 25 bps to
5.75%, while the reverse repo rate, the rate at which RBI absorbs
additional liquidity from the banking system, was hiked sharply by 50
bps to 4.50%.
RBI said that the dominant concern that has shaped the monetary policy
stance in this review is high inflation. With growth taking firm hold,
the balance of policy stance has to shift decisively to containing
inflation and anchoring inflationary expectations.
