Inflation rates down, Industry demand rate cut

Inflation rates down, Industry demand rate cutIndustry body PHDCCI has demanded a as WPI hits south. “ Decline in WPI inflation to 1.7% from 2.4% in Sep 2014 is inspiring and creates significant room for rate cut in the coming RBI policy”, said Mr. Sharad Jaipuria, President, PHD Chamber in a statement.

The official Wholesale Price Index for All Commodities for the month of October, 2014 declined by 0.6 percent to 183.9 (P) from 185.0 (P) for the previous month.

The annual rate of inflation, based on monthly WPI, stood at 1.77% (P) the month of October, 2014 (over October,2013) as compared to 2.38% (P) for the previous month and 7.24% during the corresponding month of the previous year. Build up inflation rate in the financial year so far was 2.00% compared to a build up rate of 6.23% in the corresponding period of the previous year.

“We appreciate the reform measures undertaken by the new government in terms of check on hoarding. We believe these measures would go a long way to establish price stability in the economy.” said Mr. Jaipuria.

The implementation of these measures at the grassroots would be critical for long term stability in the prices, added Mr. Jaipuria.

The decline in WPI inflation in the month of Oct 2014 is attributed to decline in the prices of primary articles (1.4%), food articles (2.7%), manufactured products (2.43%) and fuel and power (0.4%).

With the stability in macroeconomic parameters such as increasing industrial growth and declining inflation, we firmly believe that the economy is looking up and should assume high growth trajectory in the coming times, said Mr. Sharad Jaipuria

The movement of the index for the various commodity groups is summarized here:

PRIMARY ARTICLES (Weight 20.12%)

The index for this major group declined by 1.2 percent to 255.0 (P) from 258.2 (P) for the previous month. The groups and items which showed variations during the month are as follows:-

The index for Food Articles group declined by 1.3 percent to 258.5 (P) from 261.8 (P) for the previous month due to lower price of fruits & vegetables (6%), urad (3%), bajra, maize and gram (2% each) and jowar, ragi, condiments & spices and fish-marine (1% each). However, the price of fish-inland (12%), tea (3%), egg and barley (2% each) and mutton, pork and poultry chicken (1% each) moved up.

The index for Non-Food Articles group declined by 2.0 percent to 210.0 (P) from 214.3 (P) for the previous month due to lower price of soyabean (11%), raw cotton (9%), copra (coconut) (7%), guar seed (6%), raw silk and groundnut seed (2% each) and coir fibre, cotton seed and safflower (kardi seed) (1% each). However, the price of flowers (18%), raw jute and castor seed (3% each), linseed and fodder (2% each) and mesta and rape & mustard seed (1% each) moved up.

The index for Minerals group rose by 0.2 percent to 348.1 (P) from 347.3 (P) for the previous month due to higher price of barytes (22%), copper ore (16%) and iron ore (1%). However, the price of chromite and zinc concentrate (3% each), crude petroleum (2%) and manganese ore (1%) declined.

FUEL & POWER (Weight 14.91%)

The index for this major group declined by 1.3 percent to 210.7 (P) from 213.4 (P) for the previous month due to lower price of furnace oil (4%), aviation turbine fuel (3%), petrol and bitumen (2% each) and kerosene and high speed diesel oil (1% each). However, the price of lubricants (1%) moved up.

MANUFACTURED PRODUCTS (Weight 64.97%)

The index for this major group remained unchanged at its previous month`s level of 155.8 (P). The groups and items for which the index showed variations during the month are as follows:-

The index for Food Products group declined by 0.5 percent to 174.2 (P) from 175.1 (P) for the previous month due to lower price of processed prawn (8%), bakery products and tea leaf (unblended) (4% each), tea leaf (blended) and tea dust (unblended) (3% each), sunflower oil and gur (2% each) and oil cakes, vanaspati, sugar and palm oil (1% each).
However, the price of sugar confectionary (5%), powder milk and tea dust (blended) (2% each) and ghee, cotton seed oil, mixed spices and wheat flour (atta) (1% each) moved up.

The index for Beverages, Tobacco & Tobacco Products group rose by 0.3 percent to 201.6 (P) from 201.0 (P) for the previous month due to higher price of rectified spirit (3%) and soft drinks & carbonated water (2%).

The index for Textiles group declined by 0.6 percent to 143.3 (P) from 144.1 (P) for the previous month due to lower price of cotton yarn (2%) and jute sacking cloth, jute sacking bag and man-made fibre (1% each). However, the price of gunny and hessian cloth (1%) moved up.

The index for Wood & Wood Products group rose by 0.1 percent to 186.3 (P) from 186.1 (P) for the previous month due to higher price of veneered particle board (1%).

The index for Paper & Paper Products group rose by 0.3 percent to 150.5 (P) from 150.0 (P) for the previous month due to higher price of newsprint (3%) and books/ periodicals/ journals (2%).

The index for Leather & Leather Products group declined by 0.7 percent to 145.6 (P) from 146.6 (P) for the previous month due to lower price of leather footwear (1%).

The index for Rubber & Plastic Products group declined by 0.1 percent to 151.1 (P) from 151.2 (P) for the previous month due to lower price of hdpe bag (2%) and plastic/pvc chappals (1%). However, the prices of plastic rolls (3%) and hdpe woven sacks, polyester film and plastic/pvc shoes (1% each) moved up.

The index for Chemicals & Chemical Products group rose by 0.1 percent to 153.7 (P) from 153.6 (P) for the previous month due to higher price of adhesive & gum and synthetic resin (2% each) and ayurvedic medicines, non-cyclic compound, dye & dye intermediates, photographic goods, explosives, ammonium sulphate and antacid & digestive preparations (1% each). However, the price of basic organic chemicals, rubber chemicals and washing soap (1% each) declined.

The index for Non-Metallic Mineral Products group rose by 1.4 percent to 173.2 (P) from 170.8 (P) for the previous month due to higher price of marbles (10%), bricks & tiles and white cement (3% each), glass bottles & bottleware and lime (2% each) and slag cement (1%). However, the price of asbestos corrugated sheet (1%) declined.

The index for Basic Metals, Alloys & Metal Products group rose by 0.4 percent to 166.4 (P) from 165.8 (P) for the previous month due to higher price of metal containers (3%), CRC, rounds and angles (2% each) and gp/gc sheets, aluminium, billets, pencil ingots, wire rods, pig iron, sponge iron and joist & beams (1% each). However, the price of steel rods, copper / copper ingots, melting scrap, sheets, copper wire (all types) and silver (1% each) declined.

The index for Machinery & Machine Tools group rose by 0.2 percent to 134.9 (P) from 134.6 (P) for the previous month due to higher price of ups / stabilizer (7%), heat exchanger (5%), electric switches (3%), engines (2%) and chemical plant equipments and pvc insulated cable (1% each). However, the price of electric motors (2%) and ball/roller bearing, compressors and pump & assembly (1% each) declined.

FINAL INDEX FOR THE MONTH OF AUGUST, 2014 (BASE YEAR: 2004-05=100)

For the month of August, 2014, the final Wholesale Price Index for ‘All Commodities’ (Base: 2004-05=100) stood at 185.9 as compared to 185.7 (P) and annual rate of inflation based on final index stood at 3.85 percent as compared to 3.74 percent respectively as reported on 15.09.2014.