New Delhi: Inflation stands at 0.37 percent
for the second week of September year-on-year, but the price
rise compared to start of the fiscal is 6.12 percent.
However, inflation at 6.12 percent for the second week
of September is slightly less than 6.62 percent in the
corresponding period of last fiscal, when the same methodology
is applied.
According to official data, it was mainly primary
articles, including food found in raw form, which are driving
this inflation. Primary inflation has touched double digits at
10.56 percent.
Inflation relating to fuel, power, light and lubricant
category, inflation was 7.01 percent and manufactured product
inflation at 3.93 per cent.
However, RBI is not expected to reverse its monetary
stance and signal hike in interest rates even as inflationary
pressures are building.
With Prime Minister Manmohan Singh calling G-20 nations
not to "prematurely" exit from stimulus, there is little that
RBI can do to exit from its monetary stimulus, analysts added.
"I don't expect RBI to go with monetary tightening
measures in the October policy. The RBI might take increase
policy rates in its March policy," HDFC Bank chief economist
Abheek Barua said.
Inflation could have gone much more than 6.12 percent,
if primary articles have more weight in wholesale price index.
Primary articles have weight of just 22.02 percent in the
overall wholesale price index.
High rate of price rise in food items was evident as
vegetables inflation stood at around 85 percent by September
12, potatoes by 97 percent and sugar by 30 percent.
It is mainly manufactured items, which have overwhelming
weight of 63.75 percent in the index. But its inflation is
quite low at 3.93 percent.
The dichotomy over high primary inflation, including food,
and low overall inflation could be seen from the fact that
even on yearly basis, primary inflation was high at 9.29 percent, but overall rate of price was just 0.37 percent.
It is high weightage of food items in consumer price
index -- between 50 and 60 percent--that has catapulted
various kinds of retail inflation to double digits.
Year on year, wholesale vegetable prices rose by 44.85
per cent, while it has declined in a year ago period. Within
vegetables, potato prices were up 75 percent, while they were
down 16 percent in a year ago period. Sugar prices were up 43
percent.
Even year-on-year wholesale inflation is expected to
cross five percent by this year-end by many analysts, while
RBI expects inflation to reach about five percent by this
fiscal-end only.
"I expect inflation to reach 5.5 percent by end of
December," Barua said.
Bureau Report
First Published: Monday, September 28, 2009, 17:53