Inflation at 3.36%

26 Feb 2009 | 12:42 Inflation at 3.36%
The official Wholesale Price Index for All Commodities (Base: 1993-94 = 100) for the week ended 14 February 2009 declined by 0.1 % to 227.8 from 228.0 for the previous week. The annual rate of inflation, calculated on point-to-point basis, stood at 3.36 % for the week ended 14 February 2009 as compared to 3.92% for the previous week and 5.66 % during the corresponding week of the previous year.

The major group, manufacturing which carries highest weight in WPI, declined 0.1 % to 199.5 from 199.7 for the previous week mainly due to fall in index of food product, chemicals and chemical products, basic metals alloys and metal products and machinery and machine tools in this week as compared to previous week.

However index for textiles group rose 1.2 % to 140.7 from 139.0 for the previous week due to higher prices of cotton yarn-cones (6 %), texturised yarn (2%) and synthetic yarn and polyester staple fibre (1% each). In addition to this index of beverages tobacco and tobacco products, paper and paper products, non-metallic mineral products and transport equipment and parts group registered an increased in this week compared with a week ago.

Another major group, primary articles index rose marginally to 248.1 from 248.0 for the previous week. In this group major contributor like food and non-food articles declined by 0.3% and 0.1% respectively. The rise in primary articles driven by index of minerals group which rose by 5.3 % to 622.6 from 591.1 for the previous week due to higher prices of magnesite (83%), barytes (38%), ochre (25%), iron ore (6%), chromite (3%) and steatite (1%).

The index for fuel power light and lubricants group remained unchanged at its previous weeks level of 323.5.

The WPI registered a single digit growth for fifteen consecutive weeks ended 14 February 2009. The favorable external factor like decline in crude oil and commodity prices kept intact the bullish outlook on low inflation. Week on week inflation is moving close to RBI's projection and very soon its expected to touch projected level of 3%.

The third fiscal stimulus package endowed 2% slash in service and excise duty which will result in further downtrend in domestic price level.

The more than anticipated fall in inflation has raised expectations of further cut in key rates by RBI.


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