Inflation for December 2011 has come in at a 7.47%, miserably low compared to 9%+ figures we have been seeing lately. But the downside is that prices haven’t actually fallen, they have at only been flat compared to November/October.
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PA Inflation Now At 3.78%
Inflation at the Primary Articles Level is now at the lowest since 2005. (I couldn’t get the earlier data since it’s in a different base year)
This was the time onion prices spiked last year, and so did primary articles inflation.
Continuing on, primary articles won’t make too much of a difference to us; the inflation will have moved to fuel and manufactured goods, where the impact of the 20% drop in the rupee will hit first.
PA Inflation Contracts to 5.48%
For the week ended 3 December 2011, Primary Articles Inflation contracted to 5.48%. This is largely food and a good crop has made prices come down.
I believe we will see inflation go temporarily negative at this rate, though the rise of the dollar will percolate into the system and raise prices very soon.
November 2011 Inflation at 9.11%, September revised up to 10%
In a shocking development – not really – Monthly inflation for the month of November has come in at 9.11%.
As for the components, notice that slowly the primary articles piece is coming down, but the rest – Fuel and Manufactured goods, continue to inch up:
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Fuel’s up due to the revision in prices of petrol and the hike in ATF and related fuel. Of course the prices of coking coal and coke are still not revised, distorting the real impact.
The troubling issue is that this data is preliminary. Data is revised two months later. For September, whose revised data was presented today, the original figure shown was 9.72%, which is now revised to – hold your breath – 10%.
In a significant note, the revision of Manufactured Goods takes it to 8%, the highest since September 2008.
This will weigh on RBI’s decision to raise or not. The rupee, at 53.8, will now cause inflation in fuel and manufactured goods, while the winter crop dampens the prices of agri-commodities.
PA Inflation Drops to 6.92%
For the week ended 26 Nov 2011, Primary Articles Inflation has dropped to 6.92%, the lowest since July 2009.
As you can see it’s not just the rising “base” figure of last year, but the trend in the graph points downwards.
Unfortunately since much of the data is not updated in time – some data is left unchanged for three years! – I would not be too gung ho just yet. The consumer basket, measured by the CPI(IW) and CPI (Urban), is still in double digits.
PA Inflation Falls To 7.74%, Lowest Since July 2009
Primary Articles Inflation has fallen to 7.74% for the week ended 19 Nov 2011. This is the lowest since July 2009.
There is both a high base effect and a lowering of prices that’s working in favour of bringing down inflation.
But of course:
- Coal prices – Coking, non-Coking etc. – have not been updated since Feb 11. Prices have gone up substantially since; this is not part of primary articles,though.
- According to the index, tomato prices are up 71% in the last year. I don’t think they are as popular as onions, otherwise some TV channel would have thrown a fit by now.
- It’s winter, and with a great monsoon, expect prices to come down substantially. For the next three months, there shouldn’t be more than 7% headline inflation in the WPI. We’ll probably resume with inflation in Feb next year.
Primary Articles Inflation Lowest in Two Years at 10.39%
For the week ended 5 Nov, Primary Articles Inflation has come in at 10.39%, the lowest level since October 2009. This is good, in a way, and this is not even seeing too much of a base effect.
The WPI isn’t too useful for a consumer basket but it’s what we use to work our GDP numbers and interest rates. Encouraging though, but still sticking to the trendline; let’s wait and watch.
Oct 2011 Monthly Inflation at 9.73%
October Monthly Inflation – the more comprehensive Inflation report – comes in at 9.73%, which seems to be quite high as a headline number.
Component wise, Fuel is up the most:
While Manufactured goods is the seriously large component (65% weight) it seems to have reduced a bit in the index. This might be the RBI measures working, or it may simply be a phase before the rise resumes.
Meanwhile the new 10 year yield went to 8.96%, while the earlier 10 year bonds were around 9.04%: there was no big move. The BankNifty Index opened up nearly 1.5% but ended in the red, down 0.4% at 9256.
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