December 4, 2008 / 8:01 AM / 10 years ago

INSTANT VIEW 3-Indian annual inflation at 8.4 pct on Nov 22

 NEW DELHI, Dec 4 (Reuters) - India's wholesale price index
INWPI=ECI rose 8.40 percent in the 12 months to Nov. 22,
below the previous week's annual rise of 8.84 percent,
government data showed on Thursday.
 The rate was also below a median forecast of 8.91 percent
in a Reuters poll of analysts.
 **************************************************************
KEY POINTS: SUB-INDEX           (WEIGHTING)   Nov 22  Nov 15
  Pct change PRIMARY ARTICLES       (22.025)   250.5   250.2   
 +0.1 Food articles          (15.402)   245.6   244.6     +0.4
FUEL,POWER, LIGHT AND LUBRICANTS         (14.226)   345.0  
353.3     -2.3 MANUFACTURED PRODUCTS  (63.749)   203.1   203.5 
-0.2 Food Products          (11.538)   199.8   201.6    
-0.9 Textiles                          141.7   141.8     -0.1
-------------------------------------------------------------
Note: Articles in CAPITALS are sub-indices. Articles in lower
case are specific categories within the sub-indices.
-------------------------------------------------------------
 - Annual inflation for the week ended Sept. 27 was revised
up to 12.08 percent from 11.80 percent.
 - The wholesale price index stood at 233.7 points in the
week ended Nov. 22.
- Annual inflation was 3.11 percent during the corresponding
week of the previous year.
 COMMENTARY:
 ANUBHUTI SAHAY, ECONOMIST, STANDARD CHARTERED BANK, MUMBAI:
 "Clearly focus is now on growth and we can expect rate cuts
from the RBI and fiscal support from the government.
 "Risk to growth has increased as evident from falling
exports and lower IIP (industrial output) numbers."
 SAUMITRA CHAUDHURI, ECONOMIC ADVISER, CREDIT RATINGS AGENCY
ICRA, NEW DELHI:
 "This confirms the fairly obvious trend of inflation coming
off sharply and at this pace it is quite likely it will below 8
percent in the month of December itself.
 "Steel and iron ore prices have been cut and this will
reflect in the WPI numbers to be released in mid December.
 "This decline in inflation adds to the headroom available
to the central bank to further ease its monetary stance."
 D.K. JOSHI, PRINCIPAL ECONOMIST, CRISIL, MUMBAI:
 "Inflation is falling week after week, which is a good
thing from the point of view of monetary policy easing."
 SIDDHARTHA SANYAL, ECONOMIST, EDELWEISS CAPITAL, MUMBAI
 "Going ahead, in the case of most of the industrial
products, prices would actually remain flat or on a downward
trajectory only. It is pretty clear now that may be by the end
of this month or in the new year you will be seeing a petrol
price cut. This could have at least a 50 basis point reduction
direct impact in the index. As a result, you are going to see a
7 percent kind of level sometime in January, which was the
target for the RBI by the end of March.
 "Going ahead a zero inflation outlook is definitely holding
true and we may see a negative inflation India for the first
time in the last 30 years. I am reluctant to call it deflation
because if you take a two-year kind of window the number will
show a 4-5 percent annualised growth rate. A spell of negative
inflation is a very clear possibility sometime may be in
August, September, October next year."
 ABHEEK BARUA, CHIEF ECONOMIST, HDFC BANK, DELHI: "I suspect
it's the fuel group which has gone down on the back of cuts of
naphtha, LSHF (low sulphur high-speed diesel fuel) and ATF
(aviation turbine fuel) and some manufactured and commodity
prices. That's really what has brought the inflation below what
the market consensus was.
 "I think we are looking at very significant repo and reverse
repo rate cuts of 50 basis points each. There is more headroom
to RBI for monetary measures.
 "If liquidity tightens going forward, there could be a 100
basis point CRR cut, but not in the next round of cuts."
 MARKET REACTION:
 - The rupee INR=IN was at 49.81 per dollar, unchanged
from earlier.
 - The 10-year bond yield IN082418G=CC briefly fell 1
basis point to 6.77 percent after the data.
 LINKS: Ministry of Commerce and Industry Web site at
www.eaindustry.nic.in.
 BACKGROUND:
 - Annual inflation peaked at 12.91 percent on Aug. 2.
 - The central bank has slashed its main short term lending
rate by 150 basis points to 7.5 percent and banks' cash reserve
requirements by 350 basis points to 5.5 percent of deposits to
ease a cash crunch stemming from the global financial crisis
and shore up growth.
 - Managing liquidity and supporting growth have become the
short-term priority for policy makers given a sharp cash
squeeze in Indian markets and worries about a global recession.
 - The Reserve Bank of India sees inflation at 7 percent at
the end of the 2008/09 fiscal year in March.
  (Reporting by Rajkumar Ray; Editing by Charlotte Cooper)

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