Inflation reaches to 11.91% showing some moderation

A day before the regular schedule, Department of Economic Affairs, Ministry of Finance has released the Wholesale Price Index (WPI) data on Thursday at 5:00 pm reporting the creeping movement of inflation this time, which has reached to a fresh high of 11.91% for the week ended on July 05, 2008.

This new WPI data has shown the marginally escalation in inflation (0.02% only), while it was at 11.89% previous week and 4.61% in last year for the end of same week.

The government on Wednesday had announced to begin a new trend of releasing the WPI data, a day before the scheduled day due to concern over leakage of sensitive data on price rise. Since today (July 17), the WPI data would begin releasing on every Thursday at 5.00 pm instead of the previous timings of 12 o’clock in the noon.

This new released data has indicated a ray of hope in the murky vision of inflation as a result of some strict measures taken up by the central bank RBI in tightening the money flow.

Reacting to the annual inflation of 11.91 the Finance Minister P Chidambaram said, “Inflation, on a week-on-week basis, has stabilised. The WPI moved up only marginally from 238.1 in the week ending June 28, 2008 to 238.7 in the week ending July 5, 2008.”

Cheering over the new WPI data, FM stated, “The annual inflation rate for the group of 30 essential commodities has also declined to 5.74 from 5.98 percent reported for the week ending June 28, 2008…… In the ‘primary articles’ group, the annual point-to-point inflation has declined to 9.92 per cent, as compared to 10.84 per cent reported last week. Out of a total of 98 articles, 13 articles have shown a decline in prices as compared to June 28, 2008.”

“Prices of essential commodities which include food grains, pulses, edible oils, vegetables, dairy products and some other commodities including kerosene, soap and safety matches have more or less stabilized,” added Chidambaram in his released statement.

According to the latest WPI data, inflation has increased marginally on the back of surging prices in fruits, tea, maize, masoor, moong, coconut, imported edible oils and unregulated petroleum product including furnace oil, Aircraft Turbine Fuel, bitumen, light diesel oil and naptha.

Iron and Steel has also become more expensive despite of government’s strict measures. But Cement has provided some relief to the government as being stable in prices while vegetables and salt have become cheaper.

In ‘Food Articles’ that comes in the primary articles group, prices of tea (2%) and maize, masur and moong (1 % each) have moved up but slipping price of fruits and vegetables (1% each) have cumulatively decreased the index by 0.2%. In point-to-point annual rate, it has decreased from 10.33 % (on July 07, 2007) to 5.02 % for the week ended on July 05, 2008. While in the ‘Primary Articles’ group it has stood at 9.92%, which was 10.95% last year for the same week.

In the Manufactured Product group, which include ‘Food Products’, ‘Textiles’, ‘Papers and Paper product’, ‘Chemicals and Chemical products’, ‘Basic Metals Alloys & Metal Products’, ‘Machinery & Machine Tools’ and ‘Transport Equipment and Parts’, it’s index has grown up 0.3% on the basis of price rises in Textiles (0.1%), Papers and paper products (0.1%), Chemicals and Chemical products (0.5%), Basic Metals Alloys & Metal Products (0.7%), Machinery & Machine Tools (0.3%) and Transport Equipment and Parts (0.1%), while the food product group index has declined by 0.5%. It was because of declining prices in bran (all kinds) (6%) and salt and oil cakes (1% each), but the prices in some food products have also increased including prices of rice, bran, oil, maida (2% each) and cotton seed oil, atta, coconut oil, imported edible oil and gingelly oil (1% each).

The ‘Final Index’ for all commodities for the week ended on May 10, 2008 has been reached to 8.57% as against previous released data of 7.82%.

This released data has reflected the strict steps of RBI to check inflation speed in which it had enhanced repo rate and CRR by 0.50% on June 24, which clutched the speed of rising inflation due to facing the liquidity crunch in the market, as experts believe.