Wholesale inflation drops to 5-month low of 6.16%
16 Jan 2014 12:24 AM GMT
This is the slowest pace of price rise, as measured by the Wholesale Price Index, since July 2013, when inflation was 5.8 per cent. In November, wholesale price inflation increased at the fastest pace in 14 months at 7.52 per cent.
The moderation in December WPI figures comes on the back of easing prices of essential food items, including vegetables, cereals and protein-rich items.
Inflation in food articles, which has a 14.34 per cent share in the WPI basket, was 13.68 per cent in December, official data showed. It was 19.93 per cent in November.
Inflation in vegetables declined to 57.33 per cent in December from 95.25 per cent in the previous month. This was driven by onion prices, which gained 39.56 per cent compared with a 190.34 per cent rise in November. However, the rate at which potato prices rose was more than double at 54.65 per cent in December over November.
Inflation in fruits and protein-rich items such as eggs, meat and fish stood at 9.07 per cent and 11.40 per cent, respectively. In milk, inflation increased to 6.93 per cent. With inflation declining, industry has clamoured for a reduction in interest rates. However, some experts said the central bank may keep rates on hold at its quarterly monetary policy scheduled on 28 January.
Industry chambers have pitched for lower interest rates to prop up growth. Industrial output in November contracted 2.1 per cent, the worst performance in six months. 'The easing of inflation at a time when industrial growth continues to be in the red should induce RBI to review its monetary policy stance and cut its policy rates to rejuvenate growth, which has been hit by high interest costs, flagging investments and subdued demand,' CII Director General Chandrajit Banerjee said.
As price data fortify rate cut hopes, Sensex up 257 points
Mumbai: All-round buying after wholesale inflation declined to a five-month low lifted the benchmark Sensex on Wednesday by nearly 257 points to its highest level since 9 December on hopes that the RBI will lower interest rate to boost economic growth. The NSE barometer Nifty also jumped over 79 points to reclaim the 6,300-point mark as it ended at 6,320.90.
Supported by gains in rate-sensitive banking, realty and auto sector stocks, the 30-share BSE Sensex rallied by a whopping 256.61 points, or 1.22 per cent, to end at 21,289.49, its highest closing since 21,326.42 on 9 December.
Overall, 29 out of 30 Sensex-based scrips closed higher. HDFC and L&T led the gainers, while Tata Steel closed flat. Other prominent gainers included Tata Motors, Hero MotoCorp, Bhel, Sesa Sterlite
and Cipla.
Brokers said along with the rising trend in other Asian and the European markets after the World Bank raised its global growth forecast, wholesale inflation declining to a five-month low of 6.16 per cent in December, raised hopes that the Reserve Bank will ease interest rates and prop up growth.
However, profit-booking by some traders at higher levels, trimmed gains in some stocks, they added.
Shares of state-owned Coal India Ltd ended 1.81 per cent higher after the company declared an interim dividend of Rs 29 per share, or a record 290 per cent, for 2013-14. It had soared over 6 per cent in early trade. Out of 13 sectoral indices, 10 barometers closed with gains between 0.37 per cent and 1.98 per cent. The BSE Capital goods sector index rose 1.98 per cent, Banking index by 1.59 per cent, Realty index by 1.31 per cent and Auto index by 1.22 per cent.
The moderation in December WPI figures comes on the back of easing prices of essential food items, including vegetables, cereals and protein-rich items.
Inflation in food articles, which has a 14.34 per cent share in the WPI basket, was 13.68 per cent in December, official data showed. It was 19.93 per cent in November.
Inflation in vegetables declined to 57.33 per cent in December from 95.25 per cent in the previous month. This was driven by onion prices, which gained 39.56 per cent compared with a 190.34 per cent rise in November. However, the rate at which potato prices rose was more than double at 54.65 per cent in December over November.
Inflation in fruits and protein-rich items such as eggs, meat and fish stood at 9.07 per cent and 11.40 per cent, respectively. In milk, inflation increased to 6.93 per cent. With inflation declining, industry has clamoured for a reduction in interest rates. However, some experts said the central bank may keep rates on hold at its quarterly monetary policy scheduled on 28 January.
Industry chambers have pitched for lower interest rates to prop up growth. Industrial output in November contracted 2.1 per cent, the worst performance in six months. 'The easing of inflation at a time when industrial growth continues to be in the red should induce RBI to review its monetary policy stance and cut its policy rates to rejuvenate growth, which has been hit by high interest costs, flagging investments and subdued demand,' CII Director General Chandrajit Banerjee said.
As price data fortify rate cut hopes, Sensex up 257 points
Mumbai: All-round buying after wholesale inflation declined to a five-month low lifted the benchmark Sensex on Wednesday by nearly 257 points to its highest level since 9 December on hopes that the RBI will lower interest rate to boost economic growth. The NSE barometer Nifty also jumped over 79 points to reclaim the 6,300-point mark as it ended at 6,320.90.
Supported by gains in rate-sensitive banking, realty and auto sector stocks, the 30-share BSE Sensex rallied by a whopping 256.61 points, or 1.22 per cent, to end at 21,289.49, its highest closing since 21,326.42 on 9 December.
Overall, 29 out of 30 Sensex-based scrips closed higher. HDFC and L&T led the gainers, while Tata Steel closed flat. Other prominent gainers included Tata Motors, Hero MotoCorp, Bhel, Sesa Sterlite
and Cipla.
Brokers said along with the rising trend in other Asian and the European markets after the World Bank raised its global growth forecast, wholesale inflation declining to a five-month low of 6.16 per cent in December, raised hopes that the Reserve Bank will ease interest rates and prop up growth.
However, profit-booking by some traders at higher levels, trimmed gains in some stocks, they added.
Shares of state-owned Coal India Ltd ended 1.81 per cent higher after the company declared an interim dividend of Rs 29 per share, or a record 290 per cent, for 2013-14. It had soared over 6 per cent in early trade. Out of 13 sectoral indices, 10 barometers closed with gains between 0.37 per cent and 1.98 per cent. The BSE Capital goods sector index rose 1.98 per cent, Banking index by 1.59 per cent, Realty index by 1.31 per cent and Auto index by 1.22 per cent.
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