Inflation falls to 32 month low of 6.87% in July
Fuel index drives inflation downwards on YoY basis| May'12 inflation remains unrevised at 7.55%
Wholesale price index based inflation stood at 6.87% during Jul’12 against market expectations of ~7.25%. Correspondingly, inflation for Jul’11 stood at 9.36% and Jun’12 stood at 7.23%. The softness in inflation was mainly driven by the continuing fall in fuel prices. Crude prices have dropped by ~7% YoY as on 29th Jul’12.
Inflation amongst the broad sub groups of manufacturing, primary articles and fuel & power stood at 5.58%, 10.39% and 5.98% respectively while their contribution stood at 54.87%, 31.64% and 13.49% respectively. Inflation in fuel group has been continuously correcting and manufacturing inflation has been in 5-6% range over the past 6-7 months. However, primary articles inflation is yet to show any correction with both food and non-food inflation hovering in double digits.
On MoM basis, the general index moved up by 0.37% against 0.18% in May’12. Manufacturing & Primary articles index surged by 0.62% & 1.11% respectively while fuel index declined 1.52%. Amongst the major subgroups, Minerals (1.36%weight)and Mineral oils (9.36%weight) declined by 3.39% & 2.27% respectively while Non-food articles (4.26% weight) rose by 2.95% on MoM basis.
While WPI index is showing some moderation, CPI is still in double digits. There serve bank kept policy rates unchanged with the primary motive of controlling inflation and anchoring inflation expectations. While other emerging economies have accelerated their rate cut cycle, India’s inflation is restricting RBI’s move to reduce policy rates. Domestic inflation is being primarily driven by crude and other imported commodity prices. Inflation outlook still seems bleak in light of the poor monsoon performance this year, rising fiscal deficit and the pricing pressure from imported commodities.
Click here to read the full report
Have a question?
- Fixed Income Markets: Time to rebuild duration
- Week Ahead: Markets are expected to remain range-bound
- Indian Economy: Expect drop in CPI inflation
- Sep '13 WPI at 6.5%; difficult choices for RBI
- Core inflation at 1.9%, expect easing stance from RBI
Also On IndiaNotes.Com
20 tips to come out of liquidity crisis
It's all about psychology
Mphasis Q4FY13 Results: Revenue softer than expectation, but margins in line, accumulate
Hexaware: Buy for a target of Rs133
Weekly Technical: Add long positions in Nifty futures for the revised target of 6550
Sensex and Nifty settle above the crucial 21,000 and 6,250 levels respectively