Inflation Rises To 4.13 Per Cent

The annual rate of inflation rose up by 0.35 percentage points to 4.13 per cent for the week ended October 4.

Inflation, based on the wholesale price index (WPI), rose to 4.13 per cent (provisional) for the week under reference from 3.78 per cent (provisional) in the previous week, mainly on account of a sharp rise in prices of cash crops.

Compared to this, annual inflation was 6.52 per cent in the corresponding week last year.

Reflecting the upward momentum in prices, the index for all commodities (base 1981-82=100) rose by 0.3 per cent to 330.2 (provisional) as against 329.1 in the previous week.

Meanwhile, the rate of inflation based on the final index stood at 3.9 per cent for the week ended August 9 (latest available), as against 4.1 per cent for the week based on the provisional index.

The final index for all commodities for the week was 326.0 compared to the provisional index of 326.7. Inflation is likely to go up substantially the week after next when the hike in rail freight of essential commodities comes into effect.

According to projections, the freight increase of five to 16 per cent will have a direct impact of 0.314 percentage points on inflation.

Economists have suggested that the low inflation being witnessed now may be due to the slackening of demand and is likely to go up in the second half of current fiscal.

October-March is likely to witness an average inflation of seven per cent as there has been an increase in money supply at 16 per cent in the first half, according to the Chief Economist at the National Council for Applied Economic Research (NCAER), Dr Shashank Bhide. Among the three major groups in WPI, the index for primary products surged during the week by 0.9 per cent to 340.2 from 337.1 for the last week.

While the index for manufactured products rose marginally to 316.9 from 316.8 in the previous week, the index for fuel, power, light and lubricants (FPLL) remained unchanged at 370.7 for the second consecutive week.

The FPLL group, which mostly consists of commodities under the administered price mechanism (APM), had witnessed a major jump in one months time due to the massive hike in the prices of petroleum products in the first week of September.

During the week, the prices of sugarcane (up 7 per cent), raw skins (up 4 per cent), grinding wheels (up 8 per cent), asbestos cement corrugated sheets (up 7 per cent) and steel files (up 5 per cent) went up substantially, while prices of fish (down 6 per cent) and carbon tools and high speed steel (down 5 per cent) eased.

Among primary products, the index for food products went up by 0.5 per cent to 387.8 from 386.0 due to increase in the prices of fruits and vegetables (3 per cent), arhar and poultry chicken (2 per cent) and barley and eggs (1 per cent each).

Under the sub-group, the prices of fish (-6 per cent), maize (-2 per cent) and wheat, jowar, masur and condiments and spices (-1 per cent each) eased.

The index for non-food articles shot up by 2.0 per cent to 345.2 from 338.3 due to the increase in the prices of sugarcane (7 per cent), raw skins (4 per cent), soya bean (3 per cent), raw jute (2 per cent) and castor seed (1 per cent).

However, the prices of raw rubber (-3 per cent), fodder (-2 per cent) and rape and mustard seed (-1 per cent) fell during the week.

Among manufactured products, the index for food products came down by 0.1 per cent to 325.3 from 325.6, mainly due to decrease in groundnut oil (-2 per cent) and oil cakes (-1 per cent). However, prices of coconut oil (2 per cent) and ghee (1 per cent) appreciated during the week.

The index for textiles rose marginally to 310.3 from 310.2 due to increase in the prices of viscose filament yarn and filament yarn synthetic (1 per cent each).

However, prices of cones decreased by one per cent in the textiles sub-group.

The index for non-metallic products went up by 0.4 per cent to 346.6 from 345.2 due to increase in grinding wheels (8 per cent) and asbestos cement corrugated sheets (7 per cent).

The index for basic metals, alloys and metal products fell marginally to 348.9 from 349.0 due to decrease in prices of carbon tools, high speed steel (-5 per cent) and bright bars (-1 per cent).

In the sub-group, price of steel files went up by 5 per cent.

The index for machinery and machine tools increased by 0.1 per cent to 300.6 from 300.2 due to firming up of prices of tractors (2 per cent).

The index for other misc manufacturing industries fell by 0.1 per cent to 179.2 from 179.3 due to a marginal fall in the prices of house service meters.

The indices for all other groups remained unaltered at their respective previous weeks level.