No Respite: India's inflation rate surges to 12.63 percent, monetary tightening seen
India's wholesale price index (WPI)-based inflation rate has surged to a new 16-year high of 12.63 percent in the 12 months to August 9, higher than previous week's figure of 12.44 percent, government data showed on Thursday, sparking worries that the central bank will move soon to further tighten monetary policy in its bid to curb credit growth and tame inflation.
A year ago, the annual rate of inflation stood at 4.24 percent.
According to the WPI, which is India's most closely watched cost-of-living monitor as unlike the consumer price index (CPI), which is published monthly, the WPI covers greater number of products in its computation and is published weekly, inflation rose on primarily on account of higher prices of manufacturer products including textiles and cement.
The index for the Primary Articles Group (which has a weight of 22.02 percent on the WPI) rose marginally, driven by higher prices of masur (up 3 percent), tea, moong and gram (up 2 percent each) and milk (up 1 percent) in the 'Food Articles' group and prices of rape & mustard seed (up 1 percent) in the 'Non-Food Articles' group.
However, in the 'Food Articles' group, prices of urad, fish-marine, arhar declined by 1 percent each, while the 'Non-Food Articles' group saw decline in prices of sunflower (down 8 percent), niger seed (down 6 percent), raw rubber (down 2 percent) and copra and raw cotton (down 1 percent each).
The index for the Fuel, Power, Light & Lubricants group (which has a weight of 14.23 percent on the WPI) remained unchanged.
However, the index for the Manufactured Products group (which has a weight of 63.75 percent on the WPI) rose by 0.2 percent.
The index for 'Food Products' group rose by 0.1 percent due to higher prices of khandsari and rape & mustard oil (up 1 percent each). However, the index saw decline in prices of imported edible oil (down 6 percent), rice bran oil (down 5 percent), sunflower oil (down 2 percent) and gingelly oil (down 1 percent).
The index for 'Textiles' group soared by 1.6 percent on account of higher prices of cotton yarn-cones (up 8 percent), polyster staple fibre (up 7 percent), mixed fabrics and cotton grey cloth & canvas (up 6 percent each), other cotton yarn (up 5 percent) and hessian & sacking bags (up 1 percent). However, the prices of texturised yarn declined by 5 percent while those of cotton yarn-'hanks and synthetic yarn fell by 1 percent each.
The index for 'Paper & Paper Products' group also climbed by 0.1 percent due to higher prices of kraft paper (up 1 percent).
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