Inflation still negative despite fuel rise; food shows mixed trend

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%.