India's inflation rate for the week ended April 18 rose for the second consecutive week to 0.57% from 0.26% the week before. It stood at 8.23% for the corresponding week of the preceding year, data released Thursday by the Ministry of Commerce and Industry say.
Going by provisional figures, the wholesale price index or WPI for all- commodities rose by 0.6% to 230.2 from 228.8 for the preceding week.
Inflation, based on the wholesale price index, increased mainly due to higher prices of steatite, iron ore, tea, condiments and spices, fruits and vegetables, aviation turbine fuel, furnace oil as well as some manufactured products covered under all-category groups.
The final estimate of inflation for the week ended February 21 was lowered to 2.99% from the earlier provisional figure of 3.03%.
The main index for primary articles rose by 1.7%, due to higher prices of steatite, iron ore, mesta, tea, urad, raw rubber, condiments and spices, gram, moong, rapeseed, mustard seed, fruits and vegetable, bajra as well as maize. However, the prices of masur, tobacco, copra, magnesite and raw cotton declined.
The index representing fuel, power, light and lubricants rose 0.1% due to higher prices of aviation turbine fuel and furnace oil.
The index of Manufactured Products rose by 0.3%, due to the higher prices of rice bran oil, khandsari, cottonseed oil, zinc and lead ingots, imported edible oil, gur, zinc ingots sugar, oilcakes, groundnut oil as well as building bricks, while those of unrefined oil, calcium ammonium nitrate n-content, synthetic yarn, cotton yarn-hanks, cotton yarn-cones, gingelly oil, foundry pig iron, basic pig iron as well as steel ingots dropped.
The Reserve Bank of India's Deputy Governor, Rakesh Mohan, said last week there was no near-term concern about inflation and consumer price-based inflation, which was still close to double-digits, would edge lower in the coming months.
On Wednesday HSBC said India's apex bank might cut its short-term and borrowing rates by a further 25 basis points, after a new ministry would assume office next month after the ongoing general elections are completed. Robert Prior-Wandesforde, Senior Asian Economist at HSBC in Singapore, expressed a similar view.
In its annual monetary review last week, the RBI lowered the repo rate and reverse repo, at which it absorbs excess cash from the banking system, by 25 basis points each. The repo rate is at 4.75%, and reverse repo is at 3.25%.
New WPI Series
National Sample Survey Organization (NSSO), a division of the Ministry of Statistics, has been roped in to collect price data for the new WPI series with updated product portfolio.
The new series with 2004-05 base year, compared to the present 1993-94, is likely to be ready in the next two months and will reflect a consumption basket that is relevant in today's scenario, thereby making inflation data more reliable.
Government officials said the Department of Industrial Production and Planning (DIPP) would demand the release of the inflation data on a monthly basis, instead of the current weekly basis. DIPP that acts as the nodal agency for compiling and disseminating the WPI data will present the status report on the new WPI series to a working group headed by Planning Commission Member Abhijit Sen on May 8.
After technical evaluation by the Planning Commission and the Central Statistical Organization, the proposal to introduce the new system will be sent to the Cabinet to take a final call on the matter. The new data series will have a little more than 1,000 items, compared to the 435 in the current mechanism.
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