Rising Prices Push Up Inflation Rate To 4.83%

The annual rate of inflation shot up in the last week of December on continued rise in prices of food items to end the year at 4.83 per cent.

The inflation, based on the wholesale price index (WPI), rose by 0.36 percentage points to 4.83 per cent (provisional) for the week ended December 27, compared to 4.47 per cent (provisional) the week before and 8.05 per cent in the corresponding week last year.

Inflation has been showing an upward trend, barring minor aberrations, since November 8 when it touched an 11-year low of 3.20 per cent.

The present rise is mainly on account of an upsurge in prices of both primary food articles and manufactured food products in the last two weeks.

 

During the reference week the index for primary food articles went up by 1.6 per cent and the index of manufactured food items rose by 1.2 per cent.

While, last week primary food articles and manufactured items had increased by 2.3 per cent and 1.0 per cent respectively.

The main items whose prices have gone up during the week are masur and rice bran oil (12 per cent each), arhar and vegetables (6 per cent each), maize, gram and moong (5 per cent each) and maida, atta and rape and mustard oil (4 per cent each).

Meanwhile, inflation based on the final index fell to 3.7 per cent for the week ended November 01 (the latest available) from 4.0 per cent for the previous week and 3.23 per cent based on the provisional index.

The final index for all commodities for the week also fell to 331.2 from the previous weeks level of 331.6. On provisional index it was at 329.6 during the week.

The increase in inflation is on the expected lines since economists have been suggesting an increase in the second of 1997-98 as the demand start picking up.

The slackening of demand, the main reason behind low levels of inflation, is quite evident from the fact that during last year prices of only commodities under administered price mechanism (APM) have picked.

During the year, prices of commodities fuel, power, light and lubricants, which are mostly under the APM, increased by 12.96 per cent compared to 3.28 per cent in primary articles and 4.16 per cent in manufactured products.

Other commodities whose prices fluctuated substantially during the week are lac (up 24 per cent), steatite (13 per cent) and gingelly seed (up 6 per cent).

During the week under reference, the index for primary articles rose by 1.2 per cent to 350.0 from 345.9 the week before.

From the group, the index for food articles, shot up by 1.6 per cent to 401.8 from 395.3 due to increase in prices of masur (12 per cent), arhar and vegetables (6 per cent each), maize, gram and moong (5 per cent each), wheat (3 per cent), jowar, urad, fruits and milk (2 per cent each) and barley mutton, condiments and spices and coffee (1 per cent each).

Prices of pork (3 per cent) and bajra, ragi and fish (1 per cent each) from the sub-group went down during the week.

The non-food articles index rose by 0.6 per cent to 348.6 from 346.5 due to increase in prices of lac (24 per cent), gingelly seed (16 per cent), raw silk and groundnut seed (3 per cent each), rape and mustard seed, copra and linseed (2 per cent each) and fodder (1 per cent).

However, prices of raw cotton and raw jute (1 per cent each) eased from the sub-group during the week.

The index for the other sub-group remained unchanged at 166.7 during the week. However, prices steatite (13 per cent), manganese ore and dolomite (1 per cent each) went up and lime stone (2 per cent) fell during the week.

The index for fuel, power, light and lubricants remained unchanged at the previous level of 377.4.

The index for manufactured products rose by 0.2 per cent to 320.7 from 320.0 during the week. From this group, the index for food products increased by 1.2 per cent from 327.5 to 323.7 on account of increase in prices of rice bran oil (12 per cent), maida, atta and rape and mustard oil (4 per cent each), bran (3 per cent), suji, solvent extracted groundnut oil and coconut oil (2 per cent each) and gur, gingelly oil and groundnut (1 per cent each) increased.

The index for textiles decreased marginally to 313.5 from 313.9 due to fall in price of filament yarn synthetic (1 per cent) during the week.

The index for paper and paper products stood at 369.1 compared to 369.0 the previous week due to marginal increase in manufacture of board.

The index for chemicals and chemical products moved up by 0.1 per cent to 271.8 from 271.6 due to increase in prices of tetracyclin, tooth powder, castor oil and linseed oil (2 per cent each) and tooth paste and hair oils (1 per cent each). However, price of printing ink (2 per cent) went up.

A marginal increase in price of cement increased the index for non-metallic and mineral products to 340.1 from 340.2, while increase in price of lathes (3 per cent) increased the index of machinery and machine tools by 0.1 per cent to 299.5 from 299.2 in the previous week.

Indices for all the other groups remained unaltered at their respective previous weeks level.