india-inflation

Modi Govt also Fails to Control Inflation

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One of the most essential thing in Good Governance is the stability in Core Inflation. Despite, modifying the constituents and benchmarks to suit to the reportable needs of the Government, Inflation refuses to come down as Commission Agents & Traders get Rich quicker.

CPI inflation jumped to ~6.9% YoY in July, up 70bps from June. Fresh spike in vegetables and sustained rise in commodities (oil, gold, etc) pushed headline higher. Amongst components, food inflation picked up 80bps to 8.7% YoY. The high and rising food inflation was driven by spike in perishables like vegetables, meat and fish. But other items such as cereals, pulses, milk and

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Politics of Minimum Support Price & Inflation in India

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Minimum Support Prices (MSPs) of Agricultural commodities (summer crop) has been raised by a weighted average1 of 2.1% y-o-y, from 5.6% in FY14 and 24% in FY13. This is in line with the Commission for Agricultural Costs and Prices (CACP)’s recommendations. Specifically, the key MSP changes are as follows – a 4% rise for rice, 1.6% for coarse cereals, 1-2% for pulses and 0-2% for oilseeds.

A lower rise in MSP, if implemented, would be a medium-term positive for lowering the inflationary impulses in the economy, as MSPs

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Inflation Continues to scale High – FM & PM Continue with Lip Service – Lost Control of Government

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The Indian Inflation Number continues to scale new highs and the Lip Service of Congress Govt’s Finance Minister & Prime Minister continues without any action; It appears to su that the Government has no control on the economy and continues to move with Agenda Driven Politics.

The Government’s inflation report announced last week showed that WPI inflation in India for October 2013 was recorded at 7% YoY, thus marking a 50bps sequential pick-up in headline inflation. Separately, the inflation print for August 2013 was revised upwards to 7% YoY from 6.1% YoY.

The increase in headline inflation

Read moreInflation Continues to scale High – FM & PM Continue with Lip Service – Lost Control of Government

Congress Government Fails to Tackle High Inflation – Economic Growth Worst in Decade

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The Indian headline WPI shot up to 5.79%YoY compared to 4.86%YoY last month. Sequentially, headline WPI rose by 1.5%MoM in seasonally adjusted terms which is highest pace of sequential increase since December 2010 (which incidentally was also caused by a vegetable shock). The surge in vegetable prices (17.8%MoM) coincided with sharp adjustment in mineral fuel (4.4%MoM) prices during July, pushing headline inflation to a five month high. Manufacturing inflation, however remained unchanged at 2.8%YoY in July.

Food inflation accelerated to 11.9%YoY on higher prices of vegetables and cereals. While prices of vegetable such as onion (34%MoM), potato (16%MoM) surged in

Read moreCongress Government Fails to Tackle High Inflation – Economic Growth Worst in Decade

Indian Food price inflation – not just a one-off

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There is more to India’s food price inflation – which touched a decade-high 20% YoY in December 2009 – than just the drought. A fundamental tightness in the domestic demand-supply balance of food seems to have emerged over recent years. The spurt in wholesale prices of some food items in 2009 – sugar 35%, pulses 41%, milk 13% and eggs 24% – was the highest in over a decade and that could complicate monetary policy. Global food price trends alone do not explain the acceleration in food price inflation in India.

Read moreIndian Food price inflation – not just a one-off