Recent Posts

Why the RBI is in no hurry to cut interest rates (in charts)

Inflation and interest rates

The RBI is in no hurry to cut interest rates despite inflation trending low for several months now and there being no obvious immediate reason why it should move up sharply. Raghuram Rajan, the RBI governor, may have good reasons to be cautious though, considering what happened during the previous governor D. Subbarao’s tenure. He took charge as the governor in September 2008 and stayed on for 5 years. His tenure’s start coincided with the global financial crisis. The governor and the government joined hands with a monetary and fiscal stimulus to protect India’s economy and financial markets. Continue Reading →

Filed under: , , , , , , ,

Inflation is down, but producer prices buck the trend

Inflation for the month of July shows a slight dip to 9.22%, compared to the 9.44% seen in the previous month. One could argue if a drop of one-fifth of a percentage point is significant, but lower inflation, however small the actual decline, is a good thing.

The government releases overall inflation data monthly, while primary inflation data (food and non-food) and fuel price behaviour is released on a weekly basis.

Continue Reading →

Filed under: , , , , , ,

Food inflation soars, at 15.6%

The intertwining of agriculture and politics has usually meant that farmers and the consumers, especially those at the margin, suffer from government action or inaction. Food prices have been rising for a long period, at least a year, and show no signs of abating.

Today, the government announced the wholesale price index data (WPI) for the week ended November 14.

Continue Reading →

Filed under: , , , , , , ,

Inflation at 1.34% in October; may touch 3% in November

The base effect that held inflation to near zero levels has ended. Higher inflation also coincides with a period when the government has changed the frequency of inflation reporting from weekly to monthly. Now, only the primary articles (fuel and agricultural products) are reported on a weekly basis. Manufactured products’ inflation will be available only on a monthly basis. October 2009 is the first month after the reporting frequency changed. Till now, inflation rates have been hovering around the zero mark and even turning negative, due to a high base effect in the previous year.
Continue Reading →

Filed under: , , , ,

Inflation at 0.26% in the April 11 week, up marginally

Though fuel prices have come down sharply, lowering overall inflation, basic, food and manufactured product prices either continue to rise or remain stagnant. In the week ended April 11, inflation was at 0.26%, almost close to zero but higher than the previous week’s level of 0.18%.

Primary article prices are up by 4.3% over the same week, a year ago with food prices being up by 7%. Mineral and ore prices have fallen sharply. Manufactured product prices have not fallen, with producers holding on to prices to compensate for falling volumes, it seems.

Continue Reading →

Filed under: , , ,

Inflation nears zero: WPI at 0.18%

In recent months, industrial output and inflation have both falling. That has led to fears of deflationary conditions prevailing in the economy, an undesirable phenomenon. Some expect the RBI to lower interest rates again to revive demand. But the RBI itself wants the impact of the measures it has taken to percolate fully, before it takes more measures.

Continue Reading →

Filed under: , , , , , , ,