Inflation up at 3.21% on higher food, petro prices
Inflation touched 3.21% for the week ended November 17, 2007, compared to the previous week’s 3.01% on back on higher prices of food products.
By TNN |
NEW DELHI: Inflation touched 3.21% for the week ended November 17, 2007, compared to the previous week’s 3.01% on back on higher prices of food products, manufactured items and petroleum derivatives. Inflation was 5.56% during the corresponding period last year.
Inflation has been ruling below 4% for 14 weeks now after touching 6.69% earlier this year. The wholesale price index (WPI) bounced back to above the 3% level this week.
Economists attributed the rise to a bullish trend in global food prices and the record high crude oil prices which was reflected in certain petroleum-derived products. Analysts, however, do not expect inflation to cross the RBI’s target of 5% for this fiscal since the government is likely to shield the consumers from the impact of high crude and food prices. Meanwhile, the provisional figures for the week ended September 22, has been revised upwards to 3.51% from 3.42%, an official release said on Friday.
“The week-on-week marginal fluctuation in inflation would continue till the high base effect completely weans off. Besides it is difficult to speculate about the future inflation based on the week’s data in the wake of uncertainty regarding government decision on passing on high crude oil price burden on consumers. The picture will be more pronounced in coming days,” HDFC chief economist Abheek Barua said.
With crude hovering over $90 a barrel in the global markets, and food and commodity prices firming up, inflationary expectations still persist Mr Barua said. “RBI is unlikely to signal for a soft interest regime soon, he added.
Experts are of opinion that while the pressure on some seasonal agriculture commodities may ease off, inflationary pressures would continue due to demand supply mismatch of food commodities and high crude oil prices.
The wholesale price index, on which inflation data is based, rose marginally by 0.1% to 215.7 points from 215.4 points during the week. While most food products turned expensive, prices of fruits fell by 0.3% and pulses by 0.8%. More specifically, prices of bajra were up 6%, jowar 2% and arhar and pork by 1% each.
Prices of vegetables went up by 3.4%, influencing the reversal of the trend despite the effect of a sharp increase earlier in the year referred as the base effect. Price of jowar, pork, fish marine and arhar rose faster than the previous week, while prices of food items such as pulses, eggs, meat, fish and spices and condiments moved up a little lower.
In the manufactured products category, food articles were up marginally by 0.1% due to 1% higher prices of cotton seed oil and oil cakes. Among other manufactured items, prices of most chemical and chemical products rose, while those of textile and basic metal alloys and metal products declined. Prices of petroleum derivatives rose marginally by 0.1%. However among fuel and lubricant category, furnace oil prices rose by 2%.
Inflation has been ruling below 4% for 14 weeks now after touching 6.69% earlier this year. The wholesale price index (WPI) bounced back to above the 3% level this week.
Economists attributed the rise to a bullish trend in global food prices and the record high crude oil prices which was reflected in certain petroleum-derived products. Analysts, however, do not expect inflation to cross the RBI’s target of 5% for this fiscal since the government is likely to shield the consumers from the impact of high crude and food prices. Meanwhile, the provisional figures for the week ended September 22, has been revised upwards to 3.51% from 3.42%, an official release said on Friday.
“The week-on-week marginal fluctuation in inflation would continue till the high base effect completely weans off. Besides it is difficult to speculate about the future inflation based on the week’s data in the wake of uncertainty regarding government decision on passing on high crude oil price burden on consumers. The picture will be more pronounced in coming days,” HDFC chief economist Abheek Barua said.
With crude hovering over $90 a barrel in the global markets, and food and commodity prices firming up, inflationary expectations still persist Mr Barua said. “RBI is unlikely to signal for a soft interest regime soon, he added.
Experts are of opinion that while the pressure on some seasonal agriculture commodities may ease off, inflationary pressures would continue due to demand supply mismatch of food commodities and high crude oil prices.
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“Measures like duty cuts on food imports, the ban on exports and forward trading of some commodities are expected to ease the pressure on agri-commodity prices. Inflation is likely to remain in the comfort zone of 4-4.5%. However, the possibility of rise in retail oil prices and huge capital flows into the economy is a risk that could impact price stability. The central bank is more concerned about demand side factors and till the money supply continues to remain above the RBI’s projected level, future possibility of rate cut is highly unlikely,” Crisil principal economist D K Joshi said.The wholesale price index, on which inflation data is based, rose marginally by 0.1% to 215.7 points from 215.4 points during the week. While most food products turned expensive, prices of fruits fell by 0.3% and pulses by 0.8%. More specifically, prices of bajra were up 6%, jowar 2% and arhar and pork by 1% each.
Prices of vegetables went up by 3.4%, influencing the reversal of the trend despite the effect of a sharp increase earlier in the year referred as the base effect. Price of jowar, pork, fish marine and arhar rose faster than the previous week, while prices of food items such as pulses, eggs, meat, fish and spices and condiments moved up a little lower.
In the manufactured products category, food articles were up marginally by 0.1% due to 1% higher prices of cotton seed oil and oil cakes. Among other manufactured items, prices of most chemical and chemical products rose, while those of textile and basic metal alloys and metal products declined. Prices of petroleum derivatives rose marginally by 0.1%. However among fuel and lubricant category, furnace oil prices rose by 2%.
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