Posts Tagged ‘consumer price index’

Milk, Fruits and Pulses Raised Food Inflation to 17.70%

Higher prices of milk, fruits and pulses raised food inflation to 17.70% for the week ended March 27.

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This was due to the expectations that RBI may further tighten rates in its annual monetary policy on April 20.

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Meanwhile, food inflation in the previous week stood at 16.35%.

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The overall inflation for March is likely to cross the double digit mark.

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This is with prices of vital items increasing and fears of food inflation spreading to manufactured goods.

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The overall inflation, which includes variation in prices of food and non-food items, was 9.89 per cent in February.

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On an annual basis, pulses became dearer by 32.60 per cent, milk by 21.12 per cent, fruits 14.95 and wheat by 13.34 per cent.

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Moreover, on a weekly basis, the index for food articles rose by 0.9 per cent as fish marine, milk, fruits, masur and vegetables became costlier.

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In order to rein in inflation, the PM is holding a meeting of the core committee of Chief Ministers with representations from 10 states and senior Cabinet ministers.

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The core group of chief ministers comprises Andhra Pradesh, Assam, Bihar, West Bengal, Punjab, Gujarat, Haryana, Tamil Nadu, Madhya Pradesh and Chhattisgarh.

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Besides CMs, the other members of the committee are Finance Minister Pranab Mukherjee, Food and Agriculture Minister Sharad Pawar and Planning Commission Deputy Chairman Montek Singh Ahluwalia.

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General inflation has already surpassed RBI”s March end projection of 8.5 per cent.

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On the other hand, RBI governor D Subbarao had also said that the apex bank will carry on its exit from monetary stimulus policy to check high inflation and ensure sustainable growth.

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Earlier, according to the government data, released yesterday states the India”s Consumer Price Index (CPI) increased by 14.86 % in the month of February 2010 as against a year ago, which is lower than January”s annual growth of 16.22 %.

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During the month of February 2010, the CPI for Industrial Workers reduced by 2 points to 170.

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Also, India”s annual wholesale inflation rose to 9.89 % in February 2010 as compared to an increase of 8.56 % in January 2010 and 3.50 % against a year ago.

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The wholesale price inflation is more closely watched in India because it covers a higher number of products.

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The Wholesale Price Index (WPI) based inflation rate is rising quite sharply ever since it came out of the negative territory in September 2009.

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Stay Tuned for More Updates :)

Lets Know About Economic Indicators :)

Hello Friends here we come up with our another write up on “SMC Gyan Series”.

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Lets Know About Economic Indicators

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Topic is “Economic Indicators”.

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Economic indicators are important as they provide an accurate account of nation‘s economy at various points of time.

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There are various types of economic indicators that deal with different periods of time and there are others that deal with separate administrative divisions like states for example.

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They are important in context of analyzing nation’s economy.

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In this Blog, we would know what are major economic indicators ?

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Major Economic Indicators :

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1. Industrial Production:

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Measures the change in the production of the nation’s factories, mines and utilities, industrial production.

Also measures the country’s industrial capacity utilization.

2. Gross Domestic Product (GDP):

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Indicates the pace at which a country’s economy is growing or shrinking.

3. Purchasing Managers Index (PMI):

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This index includes data on new orders, production, supplier delivery times, backlogs, inventories, prices, employment, export and import orders.

4. Producer Price Index (PPI):

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Measures average changes in selling prices received by domestic producers in the manufacturing, mining, agriculture, and electric utility industries.

The PPIs most often used for economic analysis are those for finished goods, intermediate goods, and crude goods.

5. Consumer Price Index (CPI):

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Measures the average price level paid by urban consumers (80% of the population in major currency countries) for a fixed basket of goods and services.

6. Durable Goods:

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Measures new orders placed with domestic manufacturers for immediate and future delivery of factory hard goods.

This figure is a useful measure of certain kinds of customer demand.

7. Employment Cost Index (ECI):

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ECI counts the number of paid employees working part-time or full-time in the nation’s business and government establishments.

8.Retail Sales:

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It is the indicator of broad consumer spending patterns and is adjusted for normal seasonal variation, holidays, and trading-day differences.

9. Housing Starts :

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Measures the number of residential units on which construction is begun each month.

Thus to conclude Economic indicators is a tool for an investor for knowing the economic world.

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It also simultaneously a tool to smartly make money out of the sensitive movements of the financial & commodities market.

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Note : For More Latest Industry, Stock Market and Economy News and Updates, please click here

Economic Indicators

Hello Friends here we come up with our another write up on “SMC Gyan Series”.

Topic is “Economic Indicators”.

In this Blog, we would know what are major economic indicators ?

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Economic Indicators

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Major Economic Indicators :

.

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Industrial Production:


Measures the change in the production of the nation’s factories, mines and utilities, industrial production.

Also measures the country’s industrial capacity utilization.

.

Gross Domestic Product (GDP):

Indicates the pace at which a country’s economy is growing or shrinking.

.

Purchasing Managers Index (PMI):

This index includes data on new orders, production, supplier delivery times, backlogs, inventories, prices, employment, export and import orders.

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Producer Price Index (PPI):


Measures average changes in selling prices received by domestic producers in the manufacturing, mining, agriculture, and electric utility industries.

The PPIs most often used for economic analysis are those for finished goods, intermediate goods, and crude goods.

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Consumer Price Index (CPI):


Measures the average price level paid by urban consumers (80% of the population in major currency countries) for a fixed basket of goods and services.

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Durable Goods:


Measures new orders placed with domestic manufacturers for immediate and future delivery of factory hard goods.

This figure is a useful measure of certain kinds of customer demand.

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Employment Cost Index (ECI):


ECI counts the number of paid employees working part-time or full-time in the nation’s business and government establishments.

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Retail Sales:


It is the indicator of broad consumer spending patterns and is adjusted for normal seasonal variation, holidays, and trading-day differences.

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Housing Starts:


Measures the number of residential units on which construction is begun each month.

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🙂

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Thus to conclude Economic indicators is a tool for an investor for knowing the economic world.

It also simultaneously a tool to smartly make money out of the sensitive movements of the financial & commodities market.

.

🙂

Note : For More Latest Industry, Stock Market and Economy News and Updates, please click here

ECONOMIC INDICATORS… “Leading the World” Part 1

Hello Friends here we come up with our another write up on “SMC Gyan Series”.

 

Topic is ECONOMIC INDICATORS… “Leading the World”.

Here, we would go through the Brief of like what are Economic Events & Indicators and important sources of data provider for calculating & determining economic indicators.

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ECONOMIC INDICATORS… “Leading the World”

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Economic Events & Indicators are statistics that precede an economic event.

 

The goal is to track the economy & derive a forecast for future performance.

 

Economic indicators have tremendous potential to generate volume and to move prices of commodities futures as well as the financial markets including Forex.


Tools of Construction: This would include separate sections of statistical methods including

– Calculating indices and re-basing them,

– Differences between arithmetic and geometric averages,

– Standard deviations,

– Regression analysis,

– Correlation and causation,

– Margins of error in statistics calculations and

– What this means for interpretation, subsequent revisions and why they happen.

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Economic indicators include various indices, earnings reports, and economic summaries.

 

Examples : unemployment rate,  housing starts,  Consumer Price Index (a measure for inflation),  Consumer Leverage Ratio,  industrial production,  bankruptcies,  Gross Domestic Product,  broadband internet penetration,  retail sales,  stock market prices,  money supply changes etc;

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The important sources of data provider for calculating & determining economic indicators are like:

– Bureau of Labor Statistics,

– Census of Construction Industries,

– Bureau of Economic Analysis &

– Reserve Bank.

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The value of the indicator data is considered important if it presents new information, or is instrumental to drawing conclusions which couldn’t be drawn under other reports or data.

 

Each indicator is marked with “H”-“M”-“L” (High-Medium-Low), according to its level of importance, as commonly considered.

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Next Blog we would try to know about the classified categories of Economic indicators in details and what is Time Era.

Stay Tuned for more and more on this 🙂

 

However For More latest Industry,Stock Market and Economy News Updates, Click Here

Inflation Moves into Positive Territory after 13 Weeks !

Inflation-surge-after13weeks

The inflation finally pulled back into the positive territory for the first time since 30th May 2009.

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It remained in negative zone for 13 consecutive weeks.

India’s inflation came in at 0.12 per cent in week ended 5th September 2009, as against -0.12 per cent in the previous week.

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Meanwhile, the rate was 12.42 per cent in the corresponding week of previous year.

During the week, price indices for primary articles, manufacturing products and fuel, power, light and lubricants reported rise.

The index for primary articles increased 1.3 per cent to 274.7 (provisional) from 271.2 (provisional) the week before.

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Similarly the index for manufactured products also went up 0.1 per cent to 208.1 (provisional) from 207.9 (provisional).

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The price index for fuel, power, light and lubricants also rose slightly to 343.4 (provisional) from 343.3 (provisional) for the previous week.
However, the price of naphtha declined 7 per cent.

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The rate turned negative for the week ended 6th June 2009, for the first time since the new wholesale price index (WPI) series started in 1995.

The inflation rate had also turned negative in 1977.

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Inflation touched a high of 12.91% for the week ended 2nd August 2008 and touched a low of -1.74% on 1st August 2009.

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Relation Between Price and Inflation – How ?

Relation Between Price and Inflation

There is always a direct relation between prices of certain commodities and inflation. 🙂

Let’s take the price of oil. This and inflation are connected in a cause and effect relationship.

As oil prices move up or down, inflation follows in the same direction. 🙂

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The reason why this happens is that oil is a major input in the economy – it is used in critical activities such as fueling transportation – and if input costs rise, so does the cost of end products.

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For example, if the price of oil rises, then it costs more to make plastic, and a plastics company then passes on some or all of this cost to the consumer, which raises prices and thus – inflation.

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To understand inflation, we must first understand what the word means.

In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.

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When the price level rises, each unit of currency buys fewer goods and services; consequently, inflation is also erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account in the economy.

A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the Consumer Price Index) over time.

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As inflation rises, every rupee you own buys a smaller percentage of a good or service.

The value of a rupee does not stay constant when there is inflation.

This value is seen by looking at its purchasing power, i.e. the real, substantial goods that money can buy.

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Because inflation is a rise in the general level of prices, it is intrinsically linked to money, as captured by the often heard refrain “Inflation is too many dollars chasing too few goods”.

Now if demand for goods and services doesn’t fall as much, then price of goods and services go up.

Hence the retail price index goes up, and inflation takes place. 🙂

Inflation does NOT however mean an increase in the general price level of goods and services within a country.

What inflation actually means is an inflation of the money supply, i.e. an increase in the total number of rupees in circulation.

An increase in the price level is a normal consequence of inflation because it depreciates the currency, lowering each rupee’s purchasing power.

🙂

Prices and inflation

When inflation comes down, prices in the market do not come down immediately. The reasons may be many. Inflation comes down due to

* fall in consumption,

* low industrial output,

* fall in industrial commodity prices, especially crude, steel, etc.,

and

* industrial slowdowns.

🙂

Market prices for ordinary citizen are not like that.

When supply is more than demand, industries slow down the output and the prices go up.

When inflation is down RBI reduces the interest rate, prime lending rate, etc., which increases liquidity in the economy.

Excess money is then often used for speculation with traders cornering the stock and creating artificial scarcity, thereby increasing the prices or not letting it come down.

🙂

In conclusion, inflation will always be with us; it’s an economic fact of life.

It is not intrinsically good or bad, but it certainly does impact our lives.

Everyone knows, once the prices go up they stay up and never come down.

It has no meaning to common man if it does not translate into reasonable living standards.

🙂

There is always a direct relation between prices of certain commodities and inflation. Let’s take the price of oil. This and inflation are connected in a cause and effect relationship. As oil prices move up or down, inflation follows in the same direction. The reason why this happens is that oil is a major input in the economy – it is used in critical activities such as fueling transportation – and if input costs rise, so does the cost of end products. For example, if the price of oil rises, then it costs more to make plastic, and a plastics company then passes on some or all of this cost to the consumer, which raises prices and thus – inflation.

To understand inflation, we must first understand what the word means.

Inflation is an increase in the price of a basket of goods and services that represents the economy as a whole. It is an upward movement in the average level of prices, measured as an annual percentage increase. As inflation rises, every rupee you own buys a smaller percentage of a good or service.

The value of a rupee does not stay constant when there is inflation. This value is seen by looking at its purchasing power, i.e. the real, substantial goods that money can buy. Because inflation is a rise in the general level of prices, it is intrinsically linked to money, as captured by the often heard refrain “Inflation is too many dollars chasing too few goods”.

This is not difficult to follow. Imagine a world with two commodities: Mangoes picked from mango trees, and paper money printed by the government. In a year where there is a drought and mangoes are scarce, the price of mangoes rise, as there is substantially more money chasing very few mangoes.

Now if demand for goods and services doesn’t fall as much, then price of goods and services go up. Hence the retail price index goes up, and inflation takes place.

Inflation does NOT however mean an increase in the general price level of goods and services within a country. What inflation actually means is an inflation of the money supply, i.e. an increase in the total number of rupees in circulation. An increase in the price level is a normal consequence of inflation because it depreciates the currency, lowering each rupee’s purchasing power.

Prices and inflation

There is always a direct relation between prices of certain commodities and inflation. Let’s take the price of oil. This and inflation are connected in a cause and effect relationship. As oil prices move up or down, inflation follows in the same direction. The reason why this happens is that oil is a major input in the economy – it is used in critical activities such as fueling transportation – and if input costs rise, so does the cost of end products. For example, if the price of oil rises, then it costs more to make plastic, and a plastics company then passes on some or all of this cost to the consumer, which raises prices and thus – inflation.

However, even when inflation comes down, prices in the market do not come down immediately. The reasons may be many. Inflation comes down due to

* fall in consumption,

* low industrial output,

* fall in industrial commodity prices, especially crude, steel, etc., and

* industrial slowdowns.

Market prices for ordinary citizen are not like that. When supply is more than demand, industries slow down the output and the prices go up. When inflation is down RBI reduces the interest rate, prime lending rate, etc., which increases liquidity in the economy. Excess money is then often used for speculation with traders cornering the stock and creating artificial scarcity, thereby increasing the prices or not letting it come down.

In conclusion, inflation will always be with us; it’s an economic fact of life. It is not intrinsically good or bad, but it certainly does impact our lives. Everyone knows, once the prices go up they stay up and never come down. Negative inflation has no meaning to common man if it does not translate into reasonable living standards.

2004-05 to be new base yr for WPI: FM

2004-05 to be new base yr for WPI: FM

Finance minister Pranab Mukherjee has said the wholesale price index (WPI) series, which is used to calculate inflation in the country, will have 2004-05 as the base year.

“The WPI series is being upgraded with base year 2004-05 in lieu of the existing one with base year 1993-94,”

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With the advancement of the base year and probably a revision of commodities in the index and their weights, it is expected that the index would provide a better picture of the current scenario of prices.

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The WPI will now become more representative of today’s reality. It will come along with the revision in commodities and weights.

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Though the wholesale price index will become a better measure, but there are doubts like if the government would include services in the index and people will have to continue depending on other indices like the consumer price index.

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“The wholesale price index price data collection completely excludes the services sector,” Mukherjee said, replying to whether the current system of collecting data for monitoring prices is faulty.

The finance minister said information on weekly prices of manufactured products is highly meager.

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Finance minister also added that the data collection for calculating the consumer price index (urban) has already started.

It may be recalled that the National Statistical Commission, 2001, had recommended that the Central Statistical Organisation compile a single national consumer price index by computing the CPI (Urban) and CPI (Rural) separately and then combining them together into an all-India index.

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