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Economy maintains Inflation Rates Lesser Than Estimated

Inflation

The inflation rates in June 2012 were 7.25 % and in May, 7.55 %. A Thomson Reuters poll of 24 experts had median projection of the inflation rates as high as 7.37 %. But the inflation rates (measured by Wholesale Price Index) in July remained lower than expected. The Reuters poll predicted inflation rates to be in a tight range of 6.90 % to 7.59 % which are the narrowest polls since January.

Food prices went up due to lack of monsoon. This and fuel made up the 1/3rd of the wholesale price index. Food inflation was the largest but lower than previous values. Food inflation growth was 10.06 % which is slightly lower than 10.81 % in June  and 10.74 % in May. Primary articles with weightage 20.12 include food, non-food and mineral groups, had a rate of 10.39 %.

If the monsoon gets more late and weak, then there may be shortage of items and prices will increase. India may have a huge supply of foodgrains but weak storage and distribution system has led to problems.

Manufactured products, which carry a 64.97 % weightage in the WPI, rose 5.58 % against 5.02 % in June and May. Fuel group inflation fell sharply to 5.98 % from 10.27 % in June and 11.53 % in May 2012.

Fuel and power plan inflation  has dropped to 5.89 % from 14.91 %. Asia’s third largest economy slowed down to its lowest in nine years in the quarter to March but RBI managed to control the prices.

Source: NDTV

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Written by Vipul Kumar

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