3/3/2014 Inflation Mostly Driven by Primary Articles: Report - The New Indian Express

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By PTI - MUMBAI Published: 02nd March 2014 03:55 PM Last Updated: 02nd March 2014 03:55 PM

Inflation Mostly Driven by Primary Articles: Report

Primary articles led by food items have the highest share in overall price index at a whopping 35.7

per cent and are mainly responsible for high inflation, Care Ratings has said in a report.

The manufactured items basket, though having the highest weight, contributes the least to the

overall inflation index, it said.

This is despite the fact that primary articles have only 20.1 per cent weight in the overall

inflation basket, but contributed to a 35.7 per cent to spike in the overall price index, followed

by fuel and power basket, which has the lowest weight (14.9 percent), contributing to 33.4 per

cent to the overall inflation, the report said.

Against this, the manufactured products basket, which has the largest weight of 65 per cent in

the inflation basket, has contributed the least to the price spiral at 30.9 per cent, it said.

The data, based on the WPI and CPI numbers for January 2014, is the latest inflation reading,

Care said in the report authored by its economists Madan Sabnavis and Anuja Jaripatke.

Among primary articles, food items, which though have only 14.3 per cent weight, contributed 31

per cent to the overall price index, while food grains with just 4.1 per cent weight ramped the

index by 6.5 per cent. Cereals with 3.4 per cent weight have 7.6 per cent share in index, and

pulses, carrying 0.7 per cent weight, have -1.2 per cent share.

This means that though food articles have 35.7 per cent share in primary articles basket, their

contribution to the total is 31.5 per cent, with four products groups-cereals, vegetables, eggs

meat and fish & milk products accounting for 27.5 per cent of inflation.

Food grain inflation is mostly driven by cereals which include rice (5.7 pct) and wheat (1.9 pct).

Higher MSPs could be one contributing factor here as output has been robust, something RBI

Governor Raghuram Rajan also blamed last week.

Against this non-food articles contributed just 4.5 per cent, most of which comes from fibres (4

pct). Fuel & power group chipped in 33.4 per cent of overall inflation with a weight of just about

15 per cent, most of which came from mineral oils, with a share of 25.3 per cent.

Share of power stood at 13 per cent, most of which came from industrial (5 pct) and farm power

(4.2 pct).

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