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Inflation moderates below 7% …
Wholesale price index (WPI) moderated to 6.55% in January 2012 from
7.47% in December 2011. It’s the lowest reading since November 2009.
Sequentially, WPI index rose 0.5%, in line with its last three months
average sequential rise. Trend of upward revision of provisional figures
continued as Nov- 2011 inflation revised upwards to 9.48% from 9.11%.
Moderation was seen across all components with Primary Articles
inflation moderating to 2.25% from 3.01%, Fuel group inflation
moderating to 14.21% from 14.91% and Manufactured goods inflation
moderating to 6.49% form 7.41%. Food articles inflation slipped in to
the negative zone registering a decline of 0.52%YoY on increased
seasonal supply and high base effect (January 2011 - 16% YoY). Core
inflation (Manufacturing Ex food) moderated to 6.69% indicating slower
growth (IIP Dec’11-1.8%) is affecting the demand side inflation.
Food inflation declines on increased seasonal supply and high base effect…
Primary articles inflation dipped to its multi-year low at 2.25% as food
articles index (which has 71% share in the primary articles index),
registered a decline of 0.52% YoY. The decline is majorly attributable to
seasonal increase in supply of fruits and vegetables and a high base effect
(Jan’11 – 16% YoY). However, on sequential basis along with protein rich
items like milk meat & fish, prices of certain major rabi crops like wheat,
jowar, maize and oilseeds increased by 1-5% each. Within primary
articles index, mineral group index rose 1.8% MoM and 24.81% YoY as
price of crude petroleum and iron ore continued to rise. We believe
structural inflation in protein rich food items and sequential increase in
food prices on back of belief that there wont be major increase in Rabi
crop produce, may lead to food inflation rising from hereon.
Fuel group inflation still high …
High crude oil prices and considerable depreciation in rupee from peak
has kept fuel inflation elevated at 14.21% YoY. However, it moderated
from 14.91% YoY in Dec’11 and 15.86% YoY in Nov’11, as sequential rise
in mineral oil prices is lower than its last three months average rise of 1%.
Rupee appreciation in January helped offset increase in the crude prices.
Demand side inflation moderates …
Slowing growth has started impacting the manufacturing sectors.
Manufactured goods inflation has come down to 6.49%, its lowest since
February 2011. Manufacturing ex food (core inflation) also moderated to
6.68% as compared to 7.72% in Dec 2011 and 8.42% in Nov 2011.
Abating demand side price pressures and high base effect will now start
further pulling down manufacturing inflation.
Analysis : RBIs price stability objective seems to be getting achieved with
inflation reading falling within expected 6%-7% range. RBI, in its third
quarter macro economic review has expressed its concerns on growing
fiscal deficit building inflationary pressures. We therefore hold our view
that RBI may not cut rates in March 15th policy meet and first repo rate
cut seems to be coming in annual monetary policy during April 2012.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Inflation moderates below 7% …
Wholesale price index (WPI) moderated to 6.55% in January 2012 from
7.47% in December 2011. It’s the lowest reading since November 2009.
Sequentially, WPI index rose 0.5%, in line with its last three months
average sequential rise. Trend of upward revision of provisional figures
continued as Nov- 2011 inflation revised upwards to 9.48% from 9.11%.
Moderation was seen across all components with Primary Articles
inflation moderating to 2.25% from 3.01%, Fuel group inflation
moderating to 14.21% from 14.91% and Manufactured goods inflation
moderating to 6.49% form 7.41%. Food articles inflation slipped in to
the negative zone registering a decline of 0.52%YoY on increased
seasonal supply and high base effect (January 2011 - 16% YoY). Core
inflation (Manufacturing Ex food) moderated to 6.69% indicating slower
growth (IIP Dec’11-1.8%) is affecting the demand side inflation.
Food inflation declines on increased seasonal supply and high base effect…
Primary articles inflation dipped to its multi-year low at 2.25% as food
articles index (which has 71% share in the primary articles index),
registered a decline of 0.52% YoY. The decline is majorly attributable to
seasonal increase in supply of fruits and vegetables and a high base effect
(Jan’11 – 16% YoY). However, on sequential basis along with protein rich
items like milk meat & fish, prices of certain major rabi crops like wheat,
jowar, maize and oilseeds increased by 1-5% each. Within primary
articles index, mineral group index rose 1.8% MoM and 24.81% YoY as
price of crude petroleum and iron ore continued to rise. We believe
structural inflation in protein rich food items and sequential increase in
food prices on back of belief that there wont be major increase in Rabi
crop produce, may lead to food inflation rising from hereon.
Fuel group inflation still high …
High crude oil prices and considerable depreciation in rupee from peak
has kept fuel inflation elevated at 14.21% YoY. However, it moderated
from 14.91% YoY in Dec’11 and 15.86% YoY in Nov’11, as sequential rise
in mineral oil prices is lower than its last three months average rise of 1%.
Rupee appreciation in January helped offset increase in the crude prices.
Demand side inflation moderates …
Slowing growth has started impacting the manufacturing sectors.
Manufactured goods inflation has come down to 6.49%, its lowest since
February 2011. Manufacturing ex food (core inflation) also moderated to
6.68% as compared to 7.72% in Dec 2011 and 8.42% in Nov 2011.
Abating demand side price pressures and high base effect will now start
further pulling down manufacturing inflation.
Analysis : RBIs price stability objective seems to be getting achieved with
inflation reading falling within expected 6%-7% range. RBI, in its third
quarter macro economic review has expressed its concerns on growing
fiscal deficit building inflationary pressures. We therefore hold our view
that RBI may not cut rates in March 15th policy meet and first repo rate
cut seems to be coming in annual monetary policy during April 2012.
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