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With the wholesale price index shrinking to 232.7 points for the week ended June 6 from 236.5 in the same week a year ago, India possibly is the only major economy moving into a deflationary zone though the European region is near zero level due to recessionary pressures.
The stock markets immediately welcomed the development and jumped by about 200 points from the morning lows as market analysts expect this to help further ease the monetary policy restrictions and pave the way for cut in banks' lending rates.
Releasing the wholesale price data, the government said in a statement that "the annual rate of inflation, calculated on a point to point to basis stood at minus 1.61 per cent for the week ended June 6 as compared to 0.13 per cent for the previous week and 11.66 per cent during the corresponding week of previous year".
However, food articles were costlier by 8.7 per cent from the comparable week last year as pulses moved up 17 per cent, cereals 13.5 per cent, and fruit and vegetables 10 per cent.
The dip was on account of a fall in fuel prices as international crude oil is now ruling around 70 dollars a barrel against over 140 dollars a barrel during the year-ago period.
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I am not sure how they calculate this. But the prices of necessities of are at sky high. These are tricks played by the government to inflate the stock markets. For a common man, what really matters is consumer price index and the government never dares to release the figures for it, as it will directly impact FII's and there by it will hit the stock markets.
i want to say that these figures are misleading. negative inflation is just due to high base effect.
Have they ever went to the market to but goods or vegetables idiots, what govt. think we are fools thy show fake statitics, base is wrong...i would suggest them to go the market and see what are the rates of goods/vegetables and other items and then they'll come to know where inflation is..it's actually at 8-10% right now if they corrct there base value and then compare.....idoits!!!
Negative inflation is a statistical jugglery and has been caused more by the base effect (remember inflation was ruling over 11% then during the same period) and the International crude prices which were ruling at over $140 in 2008 and is now hovering around $ 70 mark. This does not in any way reveal the actual price situation in the Country. The concept of Wholesale price index is only functioning in India and nowhere else. We have been wedded to this index due to the absence of necessary data to update the Consumer price index on a week-to-week basis. What the negative inflation reveals is not deflation, but only indicate that in respect of certain commodities excluding the essential ones, the prices are not increased to the levels they were before. However, it is the duty of the Government to explain as to what is the source of this data, how it is computed etc. This is more serious considering that the RBI is contemplating monetary measures only through these figures.
This is really a crap. When the cost of living has gone up astronomically in the recent past and affect people at all levels, these morons base these numbers only on the crude oil price and try to mislead people.
I am still unable to understand the inflation figures. Inflation is negative. But all food grains and veritable prices are still High in Hyderabad. Specially, Rice is Rs.35 per K.G. I dont know about whole sale price. Hope low inflation will reduce at least retail price of rice.