India's August Inflation Rate Up

(RTTNews) - After cooling off for the last three months, India's headline annual inflation rate for all commodities, based on the new series of WPI (Wholesale Price Index), for August rose to 9.78 percent from 9.22 percent in the preceding month, on the back of costlier food, some mineral and manufactured products, prompting the Reserve Bank of India or RBI to raise its policy rates further at its mid-quarterly monetary policy review slated for September 16.

On an annual basis, food items became more expensive during the month under review. Onions grew by 45.29 percent costlier, while fruit prices were up by 22.82 percent and the rates for potatoes rose by 12.53 percent. Overall, vegetable prices witnessed 11.80 percent inflation during August, 2011.
Rate of inflation was also higher than the 8.87 percent reported in the corresponding month last year, data say.

Build-up inflation during the current fiscal so far increased marginally to 3.61 percent from 3.52 percent in the corresponding period last year, the data showed. Going by provisional figures, the WPI for 'all commodities' for August rose by 0.58 per cent to 154.9 from 154.0 in the previous month. Final annual rate of inflation for June (based on the 2004-05 base year) revised upward to 9.51 percent from the earlier provisional figure of 9.44 percent.



Primary Articles

Index for the 'Primary Articles' group rose by 0.86 percent from the preceding month of July.
The groups and items for which the index showed variations during the month were:

Index for the 'Food Articles' group rose by 0.47 percent from the previous month, due to higher prices of fish-inland, ragi, gram, chicken, rice, coffee, bajra and masur. However the prices of fish-marine, urad, arhar, fruits and vegetables, barley and wheat declined.

Index under the 'Non-Food Articles' category grew by 3.01 percent from July, on higher prices of flowers, gaurseed, coir fibre, safflower, mustardseed, castorseed, fodder, soyabean, raw silk, copra and linseed, while those of raw rubber, sunflower and raw jute declined.

Index under the 'Minerals' category declined by 0.36 percent, on lower prices of barytes, magnesite, zinc concentrate, iron ore, sillimanite and crude petroleum, whereas those of copper ore, bauxite, limestone, dolomite and steatite moved up..

Fuel, Power

Index for fuel, power, light and lubricants increased by 0.85 percent from the previous month, due to higher prices of furnace oil, naphtha, light diesel oil, bitumen, aviation turbine fuel and lubricants.

Manufactured Products such as ghee, chewing tobacco (scented or not), hessian cloth, plywood, fibre board, laminated paper, leather garments, rubber products, distemper, paints, bricks, tiles, gold and gold ornaments, steel, copper wire (all types), silver, earth moving machinery, computers, transformer, and ships/board pushed up the index for 'Manufactured Products' to 0.44 per cent.

However, prices of tea leaf (unblended), tea dust, cotton yarn, jute yarn, card board, corrugated sheet boxes, leathers, safety matches, white cement, marbles, nuts/bolts/screws/washer, electric switch gears, plastic machinery and railway brake gear declined.

RBI has been increasing policy rates to contain inflation and inflationary expectation to prevent the economy from getting overheated. The apex bank has raised the policy rate (the repo rate) eleven times by a cumulative 325 basis points (bps) since October 2009.

Economic Affairs Secretary at the Finance Ministry R. Gopalan said, ahead of the release of August's headline inflation data, that the apex bank's aggressive monetary tightening has had only a limited success in controlling inflation.

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