Friday, October 15, 2010

It is my promise to Get 7% + D.A for Jan 2011 :- C.J.Mathews Sankarathil,MBA

     
                                             C. J.MATHEWS SANKARATHIL MBA



Rising prices of food and manufactured products will continue pushing up overall inflation untill November when the kharif crop hits the markets.
According to a median forecast of 11 economists polled by DNA, inflation in September is expected to come around 8.55%.
The government is expected to announce the September data on Thursday.

India’s inflation indicator - the wholesale price index (WPI), is expected to remain sticky at August levels for September as well as October months.
“Food inflation will moderate from November. By then, the kharif harvest would have come in and food prices will tend to ease,” said Madan Sabnavis, chief economist, Care Rating.
In August 2010, WPI came in at 8.5% with food inflation at 14.64%, manufactured products at 4.78% and fuel & power at 12.55% higher compared with same period last year.
It should also be noted that the index for the month of August was based on the revised WPI format with a new base year i.e. 2004-05 and 241 new items. Inflation according to the old index was 9.5%.
The latest data on food inflation shows that it was at 16.24% as on September 25, 2010 as compared with a year ago. Fuels and power had increased by 10.73% during the same period.
Economists expect that food prices and manufactured products prices have been high in September and will continue to stay high in October too.
However, by March 2011, economists still expect that overall inflation will cool down. “We expect it will come down to 5.5% by March 2011,” said A Prasanna, vice-president, ICICI Securities Primary Dealership.
Reserve Bank of India (RBI) has been closely monitoring rising prices through WPI and other indicators like the Consumer Price Index (CPI) too. “CPI will continue to remain high. Only the high base will tend to moderate it a bit. But prices will continue to be high,” said Sabnavis.
If inflation stays high, speculations of further rate hikes by RBI will also gain ground since RBI has been resorting to rate hikes citing inflationary pressures in the past.
“We expect a 25 basis points hike in policy rates in the next review,” said Dharmakirti Joshi, chief economist of Crisil, the rating agency.
RBI will review its credit and monetary policy on November 2, 2010.

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