- The WPI inflation for July 2011 was placed at 9.22%, more or less in line with the consensus analyst estimate. The y-o-y inflation rate on Primary Articles, Fuel and Manufactured Products for July was placed at 11.3%, 12.0% and 7.5% respectively.
- Under Primary Articles the biggest m-o-m increase was noted by the Fruits and Vegetables segment; while under Manufactured Products the biggest m-o-m rise was made by Wood & Wood Products segment.
- The y-o-y core inflation for July inched up to 7.5% from 7.3% seen in June, on account of a slight uptick seen on the non-food manufactured index and also a negative base effect.
- In terms of m-o-m growth of 0.65% in WPI for July, the biggest contribution was made by Fuel group at 0.4%; factoring the complete impact of the rise in administered prices announced in the last week of June 2011.
- The y-o-y inflation for May 2011 was revised higher to 9.56% from earlier provisional estimate of 9.06%. The y-o-y Primary Articles inflation was revised sharply upwards (by more than 3%) for the second consecutive month in May 2011.
- With the inflation reading for July having come below June levels and the pace of upward (final) revisions having eased (as seen for May), the concerns over imminent rate tightening at the upcoming review in September can be put to rest for the time being. But in case the reading on inflation for next month comes in higher than expected levels, the bias may again shift towards a possible increase in policy rates.
Thanks,
Gaurav Agarwal
Head Dealer
DENIP Consultants Pvt Ltd
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