>Inflation Meter (INDIA CAPITAL MARKETS)

Negative inflation could be delayed

WPI rises to 0.31% - but downside will continue.......

• The WPI rose to 0.31% for the week ended March 21, 2009 - the first weekly increase in yearly figure in last eleven weeks. (consensus was at 0.18%).

• On a weekly basis the WPI has increased by 0.13%. It was led by increase in price indices of Manufacturing group (increased by 20 bps) followed by Primary group (increased by 4 bps). The Fuel Group price index was marginally down by 3 bps.

• This is the second consecutive increase on a weekly basis (the first instance since week ending of Aug 30 and Sep 06 - ’08 when the WPI rose by 8 and 12 bps respectively on a weekly basis).

• The weekly increase in WPI largely owes to the increase in the price indices of Manufactured Products group by 20 bps (for the second consecutive week). The increase in Food Articles’ price index was led by increase in prices of oil cakes, tea and coffee whereas the prices of sugar,
salt and edibles oil were decreased. However, this rise was cushioned by decline price indices of Textile Group, Chemical Products, and Basic metals alloys & metals products.

• It was a mixed bag for the Primary Articles Group (rose by 4 bps). The price index of Food Articles was down whereas the price index of Non-food Articles went up.

• The Fuel Group price index was down marginally by 3 bps (prices of ATF rose and that of Furnace oil declined).

To see full report: INFLATION METER 040409