India Today
      CURRENT ISSUE SEPTEMBER 20, 2004
 
     BUSINESS & ECONOMY: PRICES
 

INFLATION
The Real Story


It is likely that the inflation you read in the headlines sounds scarier than the inflation you feel when you go shopping. That is because despite the wholesale prices rising by 8.17 per cent for week ending August 18-the highest since 2001-consumer price inflation has been around 3 per cent.

Unlike till the mid-1990s, prices affecting producers are rising faster than prices affecting consumers. The key reason: producers aren't passing on higher input costs to consumers entirely due to competition and better cost management.

 

THE INFLATION WE HEAR MOST OF Rocketing crude oil prices since March 2004 and more than doubling of iron and steel prices in the past one year (due to China's imports and a rising domestic demand) are the biggest causes of spike in this headline rate of inflation.

Cilck here to see the Infographic


THE INFLATION THAT MATTERS MOST Food prices account for 57 per cent of consumer price index but just 27 per cent of wholesale price index. Slower rise in consumer prices is one sure indicator that food prices haven't surged as yet, barring vegetable prices. Among the three categories of consumers agriculture workers are facing the lowest rate of inflation.

Cilck here to see the Infographic


PICK YOUR INFLATION One inflation rate for the whole country makes little sense. People in different regions have different consumption patterns. For a more realistic assessment of how badly inflation is hurting you, pick the city you live in.

Cilck here to see the Infograpic


KEY CULPRITS If the surge in vegetable prices isn't showing up in overall inflation, it is because they account for just 1.5 per cent of the wholesale price index

Cilck here to see the Infographic


THE FEAR OF REVERSAL If inflation spurts further interest rates could begin to rise, making loans more expensive

Cilck here to see the Infograpic


GLOBAL PRICES Developing economies have a higher rate of inflation than developed countries

Cilck here to see the Infographic


SO WHAT LIES AHEAD Most fore- casters expect the flare-up in wholesale prices to subside-provided the agriculture harvest is good and oil prices are stable

Cilck here to see the Infographic


 

 

CURRENT ISSUE
SEPTEMBER 20, 2004
 IN THIS ISSUE
COVER STORY

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