'15'
PRICE SITUATION DURING 2000-01 The year 2000-01 ended with an annual inflation rate of 4.87% (provisional) which was the lowest recorded during the year. The increase in the administered prices of fuel products in March 2000 and then again in September 2000 had pushed up the inflation rate to over 8% level during 2000-01. However stable prices of primary and manufactured products during the year had a sobering effect on the inflation rate despite the increase in the administered prices of energy products.Annual point to point Inflation (%)
(as on March 31, 2001)
All Commodities 4.87
Primary Products -0.25
Fuel Group 15.29
Manufactured Products 3.67
Quarterly Movement in Wholesale Price Index (%)
The Primary and Manufactured Products group recorded very moderate growth in prices in all the four quarters of 2000-01. In fact the primary product group prices fell during the last two quarters (October-March).
The fuel group recorded high price rise in the first and third quarter on account of the increase in the administered prices of energy products in March and September 2000 thus pushing up the inflation rate. The rise in prices of all commodity groups was particularly very moderate during the last quarter of 2000-01.
Quarterly Movement in Prices (%)
Q1 Q2 Q3 Q4
(Apr-Jun) (Jul-Sep) (Oct-Dec) (Jan-Mar)
All Commodities 3.3 1.0 3.0 0.4 Primary Articles 3.8 0.1 0.0 -1.0
Fuel Group 11.9 1.2 11.6 1.1
Manufactured Products 0.7 1.2 1.5 0.7
Price Trends
Prices of Primary Products group in 2000-01 were lower than last year by 0.3% over 1999-2000. Food articles dominate the Primary Articles group. Within food articles it is the foodgrains that determine the overall trend in prices. The financial year 2000-01 closed with prices of foodgrains lower than the preceding year by 4.0%.
Annual Increase in prices of Primary Articles (point to point) (as on March 31,2001)
Annual Rate of Inflation (%)
1999-2000 2000-01
Primary Articles 3.8 -0.3
Food Articles 6.7 -2.5
Foodgrains 4.9 -4.0
Fruits & Vegetables 17.0 21.7
Pulses 12.4 7.6
Non food articles -3.4 6.3 Oilseeds -7.8 2.8 Fibres -3.5 7.3
This group represents energy products-coal, electricity, mineral oils- whose prices are mostly administered. The increase in administered prices of energy products twice during 2000-01 pulled up inflation rate in this sub group causing the overall inflation rate to rise above the 8% level during 2000-01.
The fuel group registered an increase of 15.3% percent for the week ending March 31, 2001 as against a rise of 26.9 percent in the corresponding period last year and accounted for 56.9% of the inflation at the end of financial year 2000-01. That means that over half of the inflation rate of 4.87% recorded on March 31, 2001 was due to the price rise in fuel products group.
Annual Rise in prices : Fuel Group (as on March 31,2001)
Annual Rate of Inflation (%)
1999-2000 2000-01
Fuel Group 26.9 15.3
Coal Mining 8.8 18.1
Mineral Oils 42.0 17.5
Electricity 15.1 11.5
The core inflation determinant with the largest weight (63.75%) in the Wholesale Price Index is the manufacturing sector. This group had registered a modest inflation rate of 3.67% at the end of the fiscal year 2000-01.
Annual Rise in prices : Manufactured Products Group (as on March 31,2001)
Annual Rate of Inflation (%)
Manufactured Prod. 2.9 3.7
Food Products 0.3 -3.3
Sugar 4.1 -0.1
Edible Oils -18.0 -6.4
Textiles 2.7 3.0
Chemicals & Chem.Prod. 5.8 4.5
Iron & Steel 1.5 1.3
Non Ferrous Metals 4.6 -0.8
Cement -1.2 20.3
(iv) Price Behaviour of Essential Commodities
Prices of the group of 30 essential commodities that are monitored on a weekly basis, rose by a modest 0.7% on March 31, 2001 as against 8.4% in corresponding period last year. Prices of 16 essential commodities were reported to be lower than last year at the end of 2000-01. Availability and prices of most of the essential commodities of daily use are comfortable at present. However the following essential commodities presently recording a high price rise may require close monitoring in the coming months:-
Vegetables
- Potatoes
- Onions
Pulses (Production is lower by 1.7 million tonnes in 2000-01 over 1999-2000)
- Moong
- Gram
- Urad
Tea
Prospects of Price Situation in 2001-02
Some rise in prices may result in the coming months on account of the seasonal pressure on prices of some primary commodities. However, inflation rate may still hover around the 5-6% level in the coming weeks if there is no abnormal increase in manufactured sector prices as prices of energy products would now stabilise.
Prices and supply situation of most of the essential commodities as on date is comfortable and is likely to remain so in the coming months.
As per the latest estimates received from the Ministry of Agriculture, foodgrains production has recorded a sharp decline of 12.8 million tonnes in 2000-01 and is estimated to be 196.1 million tonnes as against a record production of 208.9 million tonnes in 1999-00. Had it not been for record public stocks of foodgrains with the FCI at 46.5 million tonnes as against the minimum buffer stock norm of 15.8 million tonnes for April 1,2001, the country would have faced a serious supply situation and market prices would have become highly volatile. Adequate stocks of foodgrains with the Government would help stabilise prices of foodgrains.
Stock Position of Foodgrains
Rice Wheat Total
--------------------------------- ------------------------------- -------------------------------
2000 Min.norm Actual Stock Min.norm Actual Stock Min.norm Actual Stock
1st January 8.4 20.7 8.4 25.0 16.8 45.7
1st March - 23.2 - 23.3 - 46.5
1st April 11.8 - 4.0 - 15.8 -
Current market prices are fairly stable both for rice and wheat and the expectation of record procurement of wheat (18-19 million tonnes) despite decline in production ensures Government's ability to intervene in the market to bring about moderation in foodgrain prices.