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Inflation Watch

S.D. Naik

THE annual rate of inflation measured in terms of the wholesale price index (WPI) on a point-to-point basis declined to 6.43 per cent for the latest recorded week ended June 3, 2000. In the preceding week, it had shot up to 6.59 per cent from 6.3 per cen t a week before.

The decline of 0.16 per cent in the inflation rate during the week was largely on account of the further dip in the inflation rate for the manufactured products group which accounts for a weight of 63.75 per cent in the WPI.

The inflation rate for this group dropped to 1.54 per cent from 1.76 per cent during the week. The rate for the fuel group also declined marginally to 26.29 per cent from 26.70 per cent. However, the inflation rate for the primary articles group rose to 6.10 per cent from 5.87 per cent over the same period.

The inflation rate during the corresponding week of last year (June 5, 1999) was much lower at 3.02 per cent based on final data. Thus the current inflation rate is more than double the rate prevailing a year ago.

The inflation rate based on consumer price index for industrial workers (CPI-IW) rose to 5.54 per cent for April from 4.83 per cent in March. It was, however, much higher at 8.4 per cent for April 1999.

The major price movements during the latest week were for wheat, inland fish and condiments & spices (up four per cent each), vegetables and mutton (up two per cent each), mesta (up seven per cent), raw skins (up two per cent), vanaspati and groundnut oi l (up two per cent each), bajra (down three per cent), masur and tea (down two per cent), castor seed (down two per cent), maida, suji, atta and coconut oil (down two per cent each), viscose filament yarn and texturised yarn (down three per cent each) an d polyester yarn (down two per cent).

The official WPI for all commodities (1993-94 = 100) for the week ended June 3, 2000 rose marginally to 152.3 from 152.1 in the preceding week.

The final WPI for all commodities (1993-94 = 100) for the week ended April 8, 2000 stood at 151.9 against the provisional index of 148.9. Thus, the annual rate of inflation based on final data in terms of the WPI calculated on a point-to-point basis for the week ended April 8 was 6.75 per cent against 4.64 per cent based on provisional data.

Looking at the sharp variation between the inflation rates based on provisional and final data over the past several weeks, it appears that the final inflation rate for the week ended June 3 is likely to be significantly higher than the currently estimat ed rate of 6.43 per cent.

Over a period of four weeks (May 6 to June 3), the index rose for eggs, meat and fish by 5.7 per cent each, condiments & spices 2.5 per cent, fibres 2.9 per cent, cotton yarn 2.7 per cent, and cotton textiles by 2.1 per cent. Over the same period, the in dex declined for other food articles by 3.7 per cent and for woollen textiles by 9.4 per cent.

As for the recent commodity price movements, the prices of edible oils firmed up considerably over the week. Groundnut oil was quoted in Mumbai market on June 19 at Rs. 410 per 10 kg against Rs. 385 on June 12. Among supplementary oils, imported palmolei n was quoted at Rs.230 per 10 kg on June 19 against Rs.213 on June 12.

Groundnut prices (Java quality) at Mumbai's oilseeds market have risen sharply by 12 per cent over the last one month because of the diminishing ready stocks. Groundnut Java 60/70 rose to Rs. 2,750 per quintal from Rs. 2,450 a month ago. Likewise Java 70 /80 prices jumped up to Rs. 2,650 a quintal from Rs.2,375 and Java 80/90 to Rs. 2,600 from Rs. 2,325 over the same period.

Sugar prices also rose sharply at the Navi Mumbai wholesale market. In spot deals on June 19, S-30 variety was quoted at Rs.1,455/1,476 per quintal while M-30 variety was at Rs.1,470/1,565.

In bullion, standard gold was quoted in Mumbai market on June 19 at Rs.4,560 per 10 gm against Rs.4,480 on June 12. Silver .999 was quoted at Rs.8,025 per kg on June 19 against Rs.7,950 on June 12.