Inflation jumps to 3.75% on soaring jet fuel, food items
Analysts feel the sharp rise in inflation after kharif crops can be attributed to supply shocks in primary articles and to the hardening crude oil prices.
By TNN |
NEW DELHI: Wholesale price-based inflation rose to 3.75% in the last week of November from 3.01% in the previous week due to a rise in the prices of crude oil derivatives, some food products and manufactured items. The surge in prices was steepest in case of aviation turbine fuel, naphtha and bitumen.
Inflation is now the highest since 3.94% in the week ended August 25 but is still below RBI's 5% target. The figure was ruling at 5.36% during the corresponding period last year. Meanwhile, inflation for the week ended October 6 has been revised upwards to 3.22% from 3.07%, an official release said on Friday.
Analysts feel the sharp rise in inflation after kharif crops can be attributed to supply shocks in primary articles and to the hardening crude oil prices. Also, with money supply still growing at 23% a year, the central bank is expected to keep the interest rates untouched, a move that could slowdown the economy growth, economists told ET.
"The jump in inflation rate is very pronounced partly because of the fact that the comparable figures in the corresponding periods have started showing moderation. Besides, higher crude prices and the demand -supply mismatch in agri-commodities also contributed to the jump in inflation. Although the government hasn't allowed state firms to raise domestic fuel prices, industry fuels such as ATF and furnace oil are sold at market prices," said CRISIL director and chief economist D K Joshi. "Volatility in primary articles price index is difficult to predict on week on week basis. However, till demand -supply mismatch continues to persist, such fluctuation in prices would continue to be there," said he.
Economists also feel since the government has not passed the higher crude price burden on consumers of domestic fuel like LPG, petrol, diesel, the phenomenon of volatility in inflation number would continue.
"High crude oil prices have started hurting oil producers who are finding it hard to save their margins. As oil companies are unable to revise the prices of politically sensitive fuel products, they have started passing their burden on industry fuel users," said FICCI economic advisor Anjan Roy. Such a trend will definitely push the inflation up. "RBI policy objectives are price stability and inflation control. Till inflows continue to surge any rate cut is unlikely," said RIS director general Nagesh Kumar.
The wholesale price index, on which the inflation data is based, rose to 215 from 214.7 points for the previous week. The prices of fuel products jumped sharply. ATF prices shot up by 16%, while naphtha and bitumen became costlier by 9% and 6% respectively. Prices of coconut oil and gingelly oil increased by 2% while groundnut oil and imported edible oil were up by 1%. The prices of manufactured products too went up. Texturised yarn was up by 2%, acids of all kinds moved up by 4%, zinc ingots and foundry pig iron by 3%. Prices of vegetables, condiments, and spices were dearer by 1%.
Inflation is now the highest since 3.94% in the week ended August 25 but is still below RBI's 5% target. The figure was ruling at 5.36% during the corresponding period last year. Meanwhile, inflation for the week ended October 6 has been revised upwards to 3.22% from 3.07%, an official release said on Friday.
Analysts feel the sharp rise in inflation after kharif crops can be attributed to supply shocks in primary articles and to the hardening crude oil prices. Also, with money supply still growing at 23% a year, the central bank is expected to keep the interest rates untouched, a move that could slowdown the economy growth, economists told ET.
"The jump in inflation rate is very pronounced partly because of the fact that the comparable figures in the corresponding periods have started showing moderation. Besides, higher crude prices and the demand -supply mismatch in agri-commodities also contributed to the jump in inflation. Although the government hasn't allowed state firms to raise domestic fuel prices, industry fuels such as ATF and furnace oil are sold at market prices," said CRISIL director and chief economist D K Joshi. "Volatility in primary articles price index is difficult to predict on week on week basis. However, till demand -supply mismatch continues to persist, such fluctuation in prices would continue to be there," said he.
Economists also feel since the government has not passed the higher crude price burden on consumers of domestic fuel like LPG, petrol, diesel, the phenomenon of volatility in inflation number would continue.
"High crude oil prices have started hurting oil producers who are finding it hard to save their margins. As oil companies are unable to revise the prices of politically sensitive fuel products, they have started passing their burden on industry fuel users," said FICCI economic advisor Anjan Roy. Such a trend will definitely push the inflation up. "RBI policy objectives are price stability and inflation control. Till inflows continue to surge any rate cut is unlikely," said RIS director general Nagesh Kumar.
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The wholesale price index, on which the inflation data is based, rose to 215 from 214.7 points for the previous week. The prices of fuel products jumped sharply. ATF prices shot up by 16%, while naphtha and bitumen became costlier by 9% and 6% respectively. Prices of coconut oil and gingelly oil increased by 2% while groundnut oil and imported edible oil were up by 1%. The prices of manufactured products too went up. Texturised yarn was up by 2%, acids of all kinds moved up by 4%, zinc ingots and foundry pig iron by 3%. Prices of vegetables, condiments, and spices were dearer by 1%.
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