Indian wholesale prices rise for first time since May
Friday, 18 September 2009
MUMBAI, Sept. 17 (Bloomberg): India's wholesale prices rose for the first time in 14 weeks as a nascent global economic recovery pushed up the cost of commodities and manufactured goods.
The benchmark wholesale-price index climbed 0.12 per cent in the week to Sept. 5 from a year earlier, after retreating 0.12 per cent in the previous week, the commerce ministry said in New Delhi today. That compared with the median forecast of a 0.1 per cent fall in a Bloomberg News survey of 12 economists.
The re-emergence of inflation comes amid slowing growth prospects in India, making it difficult for policy makers to decide when to raise interest rates. Governor Duvvuri Subbarao, who predicts Asia's third-largest economy may be among the first to increase borrowing costs, said this week the Reserve Bank of India will do so only upon "sure" signs of a recovery.
"A pick up in inflation is a serious concern," said Sherman Chan, an economist at Moody's Economy.com in Sydney. "The authorities are keen to make preemptive moves in containing inflation, though we expect the Reserve Bank to only tighten policy when growth returns above 7 per cent."
Finance Minister Pranab Mukherjee expects India's economic expansion to slow this quarter and the next as a shortage of rain reduces harvests. The government is "doubtful" the 6.1 per cent pace of growth reported in the three months to June 30 will be maintained in the second and third quarters of the fiscal year ending March 2010, he said Sept. 7.
The yield on India's benchmark 10-year benchmark bond held at 7.13 per cent, near the lowest in two weeks, after the inflation report. The rupee was little changed at 47.975 rupee against the dollar, while the Sensitive stock index pared gains, rising 0.3 per cent to 16729.97.
The index of primary articles that includes grains and other food items gained 9.05 per cent in the week to Sept. 5 from a year earlier, today's report showed. The index of manufactured products declined 0.14 per cent.
Subbarao on Sept. 15 described the need to balance boosting growth against checking inflation as "a challenge". He forecast inflation may accelerate to more than 5.2 per cent by March 31, exceeding the central bank's 5 per cent estimate given in July.
Deficient rainfall in the four-month monsoon season that usually starts in the first week of June has created food shortages and hurt agriculture production, raising prices and delaying India's economic recovery, said Chan of Moody's Economy.com.
India's monsoon rainfall, the main source of irrigation for the nation's 235 million farmers, may be about 20 per cent less than the country's 50-year average, the India Meteorological Department said Sept. 7. Insufficient rains may cause damage to commodities such as rice and sugar cane, the agency said.
The benchmark wholesale-price index climbed 0.12 per cent in the week to Sept. 5 from a year earlier, after retreating 0.12 per cent in the previous week, the commerce ministry said in New Delhi today. That compared with the median forecast of a 0.1 per cent fall in a Bloomberg News survey of 12 economists.
The re-emergence of inflation comes amid slowing growth prospects in India, making it difficult for policy makers to decide when to raise interest rates. Governor Duvvuri Subbarao, who predicts Asia's third-largest economy may be among the first to increase borrowing costs, said this week the Reserve Bank of India will do so only upon "sure" signs of a recovery.
"A pick up in inflation is a serious concern," said Sherman Chan, an economist at Moody's Economy.com in Sydney. "The authorities are keen to make preemptive moves in containing inflation, though we expect the Reserve Bank to only tighten policy when growth returns above 7 per cent."
Finance Minister Pranab Mukherjee expects India's economic expansion to slow this quarter and the next as a shortage of rain reduces harvests. The government is "doubtful" the 6.1 per cent pace of growth reported in the three months to June 30 will be maintained in the second and third quarters of the fiscal year ending March 2010, he said Sept. 7.
The yield on India's benchmark 10-year benchmark bond held at 7.13 per cent, near the lowest in two weeks, after the inflation report. The rupee was little changed at 47.975 rupee against the dollar, while the Sensitive stock index pared gains, rising 0.3 per cent to 16729.97.
The index of primary articles that includes grains and other food items gained 9.05 per cent in the week to Sept. 5 from a year earlier, today's report showed. The index of manufactured products declined 0.14 per cent.
Subbarao on Sept. 15 described the need to balance boosting growth against checking inflation as "a challenge". He forecast inflation may accelerate to more than 5.2 per cent by March 31, exceeding the central bank's 5 per cent estimate given in July.
Deficient rainfall in the four-month monsoon season that usually starts in the first week of June has created food shortages and hurt agriculture production, raising prices and delaying India's economic recovery, said Chan of Moody's Economy.com.
India's monsoon rainfall, the main source of irrigation for the nation's 235 million farmers, may be about 20 per cent less than the country's 50-year average, the India Meteorological Department said Sept. 7. Insufficient rains may cause damage to commodities such as rice and sugar cane, the agency said.