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Headline inflation came in at 8.2% Y-o-Y for January versus 8.4% in the
previous month. With this, the build-up in inflation stands at 7.4% during
April-January FY11 compared to 9.4% in the corresponding period of the
previous fiscal. The moderating trend which began in Q1FY11 had stalled
late last year as unseasonal rains in November had led to reversal in food
inflation’s declining trend. This uptick in vegetable prices is over and going
ahead, softening in vegetable prices will result in softening of WPI as well.
However, price pressures in other segments such as non-food articles
(including cotton and jute) and industrial metals (reflecting higher global
commodity prices) continue to persist. Additionally, non-food manufacturing
inflation eased Y-o-Y, primarily on base effect, while sequential momentum
remains intact. Further, inflation in some protien-based food items
continues to remain elevated, reflecting rising incomes and changing
consumption patterns. Overall, we foresee inflation easing to 7% by March
2011, but any meaningful softening thereafter looks unlikely.
Headline inflation broadly in line with expectations
Inflation stood at 8.2% Y-o-Y for January against 8.4% in December and
upwardly revised 8.1% for November. While manufacturing inflation eased (to
3.8% against 4.5% previously), food articles continued to exhibit rising inflation,
particularly in the vegetables category (up ~65% in January from -25% in
December Y-o-Y). Meanwhile, non-food manufacturing inflation dipped (~4.8%
in January versus ~5.4% in December Y-o-Y), primarily on base effect.
Importantly, the sequential trend (M-o-M, SA, 3MMA) in WPI exhibits a rise for
fifth straight month.
Food articles’ prices, led by vegetables, expected to ease
Jump in headline inflation was largely led by food inflation, which climbed 15.6%
Y-o-Y in January from 13.6% in December. Unseasonal rains in November 2010
caused a spike in vegetable prices (e.g., onions), leading to rebound in overall
food inflation. However, this sharp rise in vegetable prices is now over and prices
are correcting, as reflected in the weekly inflation trend. Accordingly, one can
expect food articles’ inflation to ease in the coming months.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Headline inflation came in at 8.2% Y-o-Y for January versus 8.4% in the
previous month. With this, the build-up in inflation stands at 7.4% during
April-January FY11 compared to 9.4% in the corresponding period of the
previous fiscal. The moderating trend which began in Q1FY11 had stalled
late last year as unseasonal rains in November had led to reversal in food
inflation’s declining trend. This uptick in vegetable prices is over and going
ahead, softening in vegetable prices will result in softening of WPI as well.
However, price pressures in other segments such as non-food articles
(including cotton and jute) and industrial metals (reflecting higher global
commodity prices) continue to persist. Additionally, non-food manufacturing
inflation eased Y-o-Y, primarily on base effect, while sequential momentum
remains intact. Further, inflation in some protien-based food items
continues to remain elevated, reflecting rising incomes and changing
consumption patterns. Overall, we foresee inflation easing to 7% by March
2011, but any meaningful softening thereafter looks unlikely.
Headline inflation broadly in line with expectations
Inflation stood at 8.2% Y-o-Y for January against 8.4% in December and
upwardly revised 8.1% for November. While manufacturing inflation eased (to
3.8% against 4.5% previously), food articles continued to exhibit rising inflation,
particularly in the vegetables category (up ~65% in January from -25% in
December Y-o-Y). Meanwhile, non-food manufacturing inflation dipped (~4.8%
in January versus ~5.4% in December Y-o-Y), primarily on base effect.
Importantly, the sequential trend (M-o-M, SA, 3MMA) in WPI exhibits a rise for
fifth straight month.
Food articles’ prices, led by vegetables, expected to ease
Jump in headline inflation was largely led by food inflation, which climbed 15.6%
Y-o-Y in January from 13.6% in December. Unseasonal rains in November 2010
caused a spike in vegetable prices (e.g., onions), leading to rebound in overall
food inflation. However, this sharp rise in vegetable prices is now over and prices
are correcting, as reflected in the weekly inflation trend. Accordingly, one can
expect food articles’ inflation to ease in the coming months.
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