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India's February Inflation Rate Up Marginally

India's February Inflation Rate Up Marginally
3/14/2012 3:53 AM ET

After cooling off in the last four months, India's headline annual inflation rate for all commodities, based on the new series of WPI (Wholesale Price Index), rose marginally in February to 6.95 percent from the preceding month's 6.55 percent due to costlier prices of egg, meat, fish and pulses and some other manufactured products.

The rate of inflation was, however, lower than the 9.54 percent reported in the corresponding month last year, data say.

On an annual basis, food items became 6.07 percent more expensive during the month under review. Egg/Meat/Fish increased by 20.00 percent, while pulses were up by 7.91 percent However, the rates of onion declined by 48.50 percent and wheat by 4.18 percent.

Build-up inflation during the current fiscal so far fell to 5.95 percent from 8.66 in the corresponding period last year, the data showed.

Going by provisional figures, the WPI for 'all commodities' for February rose by 0.44 percent to 158.4 from its previous month's level of 157.7.

Final annual rate of inflation for December (based on the 2004-05 base year) revised upward to 7.74 percent from the earlier provisional figure of 7.47 percent.

Primary Articles

Index for the 'Primary Articles' group increased by 0.90 percent from the preceding month of January.

The groups and items for which the index showed variations during the month were:

Index for 'Food Articles' group increased by 0.47 percent from the previous month due to higher prices of ragi, barley, fruits and vegetables, maize, fish-marine, beef, tea, chicken, and fish-inland. However, the prices of condiments and spices, jowar, arhar, masur, urad, moong and gram declined.

Index under the 'Non-Food Articles' category rose by 2.13 percent from January, on higher prices of gaurseed, flowers, logs and timber, raw jute, gingelly seed, groundnutseed, mesta, soyabean and castorseed, while those of copra, nigerseed, raw cotton, raw silk, raw rubber, and fodder dropped.

Index under the 'Minerals' category grew by 1.57 percent because of the higher prices of copper ore, magnesite, iron ore and zinc concentrate, whereas those of sillimanite, dolomite and barytes declined.

Fuel, Power

Index for fuel, power, light and lubricants grew by 0.23 percent from the previous month due to higher prices of lignite, furnace oil, light diesel oil, and bitumen. However, the prices of aviation turbine fuel and naphtha declined.

Manufactured Products such bidi, soft drinks, jute sacking cloth, cotton yarn, processed wood, books, distemper, non-cyclic compound, lime, white cement, silver, pressure cooker, pig iron, gold and gold ornaments, heat exchangers, electric switchgears, electrical pumps, microwave oven and shafts and some other items pushed up the index for 'Manufactured Products' to 0.35 percent.

However, prices of tobacco, jute yarn, tyre cord fabric, paper pulp, printing and writing paper, computer stationery, leather garments, jackets, leathers, tubes, hair/body oils, synthetic resin, marbles, polished granite, nuts, bolts, ferro silicon and ships/boats declined

RBI on Friday last infused around Rs.48,000 crore liquidity into the banking system by way of reducing the cash reserve ratio (CRR) to 4.75 percent from the existing 5.50 percent effective March 10 ahead of the policy meeting on March 15.

In addition, the apex bank has asked the government to cut its fiscal deficit to help rein in inflation as it prepares to ease monetary policy which will bring the annual budget into focus.

Keeping in view of the expected moderation in non-food manufactured products inflation, domestic supply factors and global trends in commodity prices, the RBI retained the baseline projection for WPI inflation for March 2012 at seven percent as set out in its October review.

Finance Minister Pranab Mukherjee will present the 2012-13 budget on Friday, and is widely expected to announce measures to cut fiscal deficit and boost growth.

by RTT Staff Writer

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