CPI Inflation Rises to 5% in October, On a Lower Base Last Year

by Paul Joseph November 13, 2015 Featured

Consumer Price Inflation came in at 5% for October, the highest in four months. A good reason was the base effect – last year, the index had tapered off and the difference shows in the higher inflation numbers. What we should really worry about is that if the slope of the inflation curve continues as is, we will easily see 7% inflation. Components: They’re Starting To Go Up Again While it’s not a major source of worry just yet, here’s how the Inflation numbers stack up on a component wise look – it seems like food is going back up, as are fuel costs, personal care, and even transport. Fuel costs are up largely due to higher taxes.     Rural Inflation Outstrips Urban In the countryside there’s a much higher concentration of food prices in the commodity basket used, so a spike in food prices means higher inflation for the villagers.… (Read On…)

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The Nifty Adjusted For Consumer Price Inflation Is Still Lower Than 2008

by Paul Joseph March 19, 2015 Featured

If you put Rs. 10,000 in the Nifty in 2000, and reinvest all dividends it will have grown to Rs. 69,410 today. (From the “Total Returns” index given by the NSE). This means you’ve just had a 7x return on the biggest index in about 15 years. However, if you consider the buying power of the rupee, it has declined due to inflation. If we take the Consumer Price  Index (CPI) and back-cast it all the way to 2000, and then run the same calculation on the Nifty (with dividends reinvested) our answers are very different: As you can see, after adjusting for inflation, even though the Nifty is close to an all time high, the purchasing-power adjusted Nifty is still only a little bit above levels seen in 2011 (the previous peak) and then, much below the effective level in 2008 January. This means all these returns we’re all proud of hasn’t even crossed the highs of the 2008 era, after adjusting for inflation .… (Read On…)

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CPI at Record Low in Oct 2014, But There’s Something Scary About the Inflation Data

by Paul Joseph November 12, 2014 Featured

CPI Inflation for October 2014 is at a record low of 5.52%, the lowest we have ever seen in the new CPI (which has only been collected since Jan 2011. Last year the same month showed inflation at over 10%, peaking in November 2013 at 11.16%.   You can see the light blue line (last year same time) sloping strongly up, while the dark blue line (current inflation index) is flattening out. Note however that the upslope will end in November (when inflation peaked last year). That means November inflation will be okay, but will December follow through? Every component looks good. Food inflation has fallen to 5.8%, which is on the back of a very high index last year. Fuel inflation too has fallen (but that might not last long if the government will increase taxes on fuel). Housing inflation too has fallen to 8%, and the only thing that’s marginally increased is “Transport” which is anyway at 2.7%.… (Read On…)

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Hedonic Adjustments For Inflation: Shady Ways To Make Things Look Good

by Paul Joseph November 7, 2014 Featured

Here’s an interesting piece by Zero Hedge on Hedonic Adjustments – in other words, how a 400% increase in price actually becomes a 7% DECLINE in price! You start with this: Which then gets complicated and more complicated to compare, so you do a lot of up and down adjustments and try to put the price of Item A with the price of Item B. But you forget that Item A was 2001 and Item B was 2010, and in 2010 you couldn’t get item A even if you wanted to, or you would pay an obscene price for it. When you forget that and only do the math to equate them: Essentially you decide that in 2001 you would have paid $1345 for what was Item B. But consider this: if you get what is “entry level” in 2001 is different from entry level in 2010, you should be comparing the entry level prices only.… (Read On…)

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Consumer Price Inflation for Aug 2014 at 7.8%, Too High For a Rate Cut

by Paul Joseph September 13, 2014 Featured

Consumer Price Inflation for August 2014 comes in at a nice 7.80%. This is lower than last month, but still quite high and the “slope” of the inflation index curve shows it… (Read On…)

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WPI Falls in July, In Total Contradition with the CPI

by Paul Joseph August 19, 2014 Featured

India’s Wholesale Price Inflation for July 2013 threw up a surprise. While consumer prices rose to 8% , we saw wholesale inflation drop to 5.19% in a strange turnaround. And component… (Read On…)

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CPI Rises to Nearly 8% in July, Food Inflation above 9%

by Paul Joseph August 12, 2014 Featured

Consumer Price Inflation in July 2014 rises after a recent falling trend. This has been due to the spike in vegetable and cereal prices, and also in other areas known only to the MOSPI… (Read On…)

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Consumer Price Inflation for Jun 2014 at Three Year Low of 7.31%

by Paul Joseph July 15, 2014 Featured

Consumer Price Inflation gives us something to cheer about, while we shop for carrots at Rs. 75 a kg in Bangalore. CPI Inflation was at 7.31%, the lowest annual number since this index… (Read On…)

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Wholesale Price Inflation for Jun 2014 falls to 5.43%, But the Monsoon Can Hurt

by Paul Joseph July 14, 2014 Featured

Wholesale Price Inflation for June 2014 came in at 5.43%, lower than the May’s 6.01%.  However, April’s low number of 5.2% was revised up to 5.55%. Component-wise, primary… (Read On…)

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Low MSP Increases Makes Up For The Sins of the Past Government

by Paul Joseph June 26, 2014 Featured

Minimum Support Prices for agricultural goods have been increased in 2014-15, but only by a marginal amount, less than 5% over the previous year. If you don’t know what MSP is: the government buys these goods from farmers at these […]

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