Monthly Update

WPI - December ‘09

• The WPI for the month of December stood at 7.31% against 6.15% in the corresponding month of the last
year. The same figure posted 4.78% in the previous month. The released figure is almost in the line with
the market’s expected figure
• This high figure of inflation is the resultant of high food prices and a low base effect. Government has
thus, decided for the off taking of surplus stocks of wheat and rice and also efforts to be made to increase
the farm-productivity
• The inflation figure is much higher than the RBI’s forecast of around 7% by March end which the central
bank published in its second quarter monetary policy review
• Hence it will definitely going to pull a chord with the RBI and help it to determine the interest-rate and
monetary policy. It is expected to tighten the monetary policy and thus, hike the interest-rates as high
inflation erodes the value of money and thus decrease its purchasing-power
• Thus we believe that that one should start booking profits form the rate sensitive like banking and real
estate and move towards defensives like FMCG and Pharma

Inflation Internals

• The sub-group of primary articles rose by 14.88% y-o-y against 11.15% in Dec’08.It registered a growth of
1.25% m-o-m mainly because of high growth in the food articles, which increased by 0.45% m-o-m. The
increase in the food articles was induced by the surge in prices of urad, moong, spices, condiments,
vegetables, pulses and wheat
• In the same sub-group, the non-food articles increased by 3.92% m-o-m due to higher prices of raw
tobacco, oil-seeds and fibers like raw jute & rubber. The index for minerals rose to 0.19% m-o-m which
was due to higher prices of fire-clay, dolomite, phosporites barites and many other minerals
• The second sub-group of fuel, power, lights and lubricants increased to 4.29% y-o-y from -0.21 in Dec’08.
It registered a growth of a mild 0.09% m-o-m due to higher prices of light diesel oil, furnance and neptha
oil
• The third sub-group of manufactured products registered an increase of 5.17% y-o-y from 6.63% in
Dec’08. it registered a growth of 0.19% m-o-m mainly because of increase in the prices of food-products,
sugar, edible oils, cotton textiles and rubber and plastic products
• Food products rose by 0.76% m-o-m on note of higher prices of edible food products. Sugar rose by
0.20% while there was an increase of 2.27% in edible oils due to higher prices of oil-seeds. Cotton-textiles
surged by 2.10% m-o-m because of higher prices of raw cotton. Metals accelerated by 0.04% m-o-m while
rubber and plastic products increased to 0.06%
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Monthly Update

Exhibit: WPI And Its Constituents

Index M-O-M (% change) Y-O-Y (% change)
Commodities/Major Groups/Groups/Sub-Groups Weight
Dec'09 2008-09 2009-10 2008-09 2009-10
All Commodities 100.00 246.50 -1.92 0.45 6.15 7.31
Primary Articles 22.03 284.10 -1.43 1.25 11.15 14.88
Food Articles 15.40 288.40 -1.63 0.45 9.95 19.17
Cereals 4.41 267.00 1.11 0.64 10.53 13.04
Rice 2.45 249.60 1.69 1.13 15.07 12.33
Wheat 1.38 269.90 0.67 0.11 4.83 12.04
Pulses 0.60 374.90 -0.26 4.43 12.59 41.58
Vegetables 1.46 297.80 -21.13 -6.09 7.65 39.22
Potatoes 0.26 438.30 -18.72 -9.74 -24.75 123.85
Onions 0.09 348.20 5.20 1.22 14.78 27.41
Fruits 1.46 312.80 -0.32 -1.04 15.91 9.83
Milk 4.37 263.10 0.61 2.29 7.40 13.36
Non-Food Articles 6.14 249.50 -1.74 3.92 9.35 7.73
Fibers 1.52 229.60 -0.87 5.81 19.37 6.44
Oil Seeds 2.67 256.50 -2.28 3.26 11.40 6.70
Minerals 0.48 588.10 2.46 0.19 41.86 -4.44
Fuel, Power, Light & Lubricants 14.23 345.20 -4.89 0.09 -0.21 4.29
Liquefied Petroleum Gas 1.84 352.90 0.00 0.00 13.86 -7.42
Petrol 0.89 246.70 -9.90 0.00 4.73 -2.18
High Speed Diesel Oil 2.02 481.40 -5.71 0.00 7.30 -0.19
Manufactured Products 63.75 211.50 -0.94 0.19 6.63 5.17
Food Products 11.54 253.30 -0.60 0.76 4.21 26.40
Sugar 3.62 247.90 0.06 0.20 14.51 53.98
Edible Oils 2.76 179.90 0.49 2.27 4.19 -2.23
Beverages, Tobacco & Tobacco Product 1.34 310.70 -0.77 0.00 8.45 5.29
Cotton Textiles 4.22 185.10 0.46 2.10 16.01 6.01
Man Made Textiles 4.72 97.80 -1.29 -0.10 2.58 -1.71
Wood & Wood Products 0.17 237.60 0.00 0.00 9.77 0.25
Paper & Paper Products 2.04 203.90 0.58 -0.10 6.37 -1.55
Leather & Leather Products 1.02 166.20 0.00 0.00 0.60 -1.25
Rubber & Plastic Products 2.39 168.80 -0.24 0.06 2.83 1.08
Chemicals & Chemical Products 11.93 229.30 -0.86 -0.26 6.10 4.61
Non-Metallic Mineral Products 2.52 220.20 -0.87 -2.00 2.90 1.80
Cement 1.73 219.30 -1.20 -2.88 1.27 -1.44
Basic Metals Alloys & Metal Products 8.34 258.20 -1.87 0.04 12.62 -7.26
Iron & Steel 3.64 290.80 -2.40 0.00 15.08 -9.49
Machinery & Machine Tools 8.36 173.50 -1.75 -0.29 3.88 -0.23
Transport Equipment & Parts 4.29 175.80 -1.02 0.00 2.99 0.17

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Monthly Update

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