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Market Eye
| Inflation still negative despite fuel rise | 16/07/2009 11:34:03 | NEW DELHI: Inflation rose marginally to (-)1.2% for the week ended July 4 against
(-)1.55% in the previous week mainly due to higher prices
of fuel items. The wholesale
price index during the corresponding week a year ago was as high as 12.19%.
Economists described the fall as a statistical effect, which does not warrant any intervention from the central bank on the cost of funds.
Overall, prices remained firm on a weekly basis due to price gains in the fuel category. Prices of naphtha, furnace oil, petrol, high speed as well as light diesel oil were significantly high. Food prices showed a mixed trend.
Grains, cereals, pulses and fruits become costlier, while prices of vegetables, eggs, meat and fish eased, causing a “moderate but not significant weakening”, in the whole category of un-processed food items. Processed food items, including dairy products, became costlier in the week.
“The latest wholesale price-based inflation number has little significance in terms of monetary policy as prices are firm on a month-on-month and week-on-week basis. There is no likelihood of significant monetary action in the next 3-4 months because of the high government borrowing and the stimulus being given to growth, which are more important than fighting inflation right now,” HDFC Bank chief economist Abheek Baruah told ET. Besides, retail inflation indicated by the consumer price index is also inching up. RBI’s first quarterly monetary policy review is scheduled on July 28. Mr Baruah said annual inflation may touch 6% by the last quarter.
Planning Commission deputy chairperson Montek Singh Ahluwalia said here that negative inflation was a temporary phenomenon. “We are in favour of modest inflation; we (will) end the year, as we have been saying, with inflation between 4%-5%,” Mr Ahluwalia said.
Commodity prices inched up 0.7% week-on-week as manufactured products and items in the fuel, power and lubricants category became costly by 3.1%. Food article prices eased 0.2%, while vegetable prices fell 1% and eggs, meat and fish softened 1.9%.
The official statement issued by the ministry of commerce and industry also upwardly revised the annual inflation for the week ended May 9 to 1.56% from the earlier reported 0.61%.
Wholesale price index (WPI)-based annual inflation fell by 1.21% in the week ended July 4, the fifth consecutive week of its decline despite a rise in retail fuel prices, official data showed on Thursday. Economists described the fall as a statistical effect, which does not warrant any intervention from the central bank on the cost of funds.
Overall, prices remained firm on a weekly basis due to price gains in the fuel category. Prices of naphtha, furnace oil, petrol, high speed as well as light diesel oil were significantly high. Food prices showed a mixed trend. Grains, cereals, pulses and fruits become costlier, while prices of vegetables, eggs, meat and fish eased, causing a “moderate but not significant weakening”, in the whole category of un-processed food items. Processed food items including dairy products became costlier in the week.
“The latest wholesale price-based inflation number has little significance in terms of monetary policy as prices are firm on a month-on-month and week-on-week basis. There is no likelihood of significant monetary action in the next 3-4 months because of the high government borrowing and the stimulus being given to growth, which are more important than fighting inflation right now,” HDFC Bank chief economist Abheek Baruah told ET. Besides, retail inflation indicated by the consumer price index is also inching up. RBI’s first quarterly monetary policy review is scheduled on July 28. Mr Baruah said annual inflation may touch 6% by the last quarter.
Planning Commission deputy chairperson Montek Singh Ahluwalia said here that negative inflation was a temporary phenomenon. “We are in favour of modest inflation; we (will) end the year, as we have been saying, with inflation between 4%-5%,” Mr Ahluwalia said.
Commodity prices inched up 0.7% week-on-week as manufactured products and items in the fuel, power and lubricants category became costly by 3.1%. Food article prices eased 0.2%, while vegetable prices fell 1% and eggs, meat and fish softened 1.9%.
The official statement issued by the ministry of commerce and industry also upwardly revised the annual inflation for the week ended May 9 to 1.56% from the earlier reported 0.61%. | Market
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