Interactive Indian Inflation Map for April 2011
The monthly release of Inflation is in for April 2011, and we have an inflation of 8.66% (provisional). We at MarketVision have built a full visualization (clicks and zooms and unzooms) at Visualizing Inflation In India, and this post will have visual excerpts with commentary.
This month we've included the change from the earlier month for each sub-category as well. The change looks like this with the legend:
(This is the change from previous year)
For each item, Inflation is shown as [Category Name] (Annual Inflation, Change from Last Month). So Food Products (5.65%, +3.3%) means the category Food Products has seen an inflation of 5.5% compared to the April 2010 (one year ago) and it has just up 3.3% from last month (last month, it was 2.25%)
Overall Inflation at 8.66%
This has a serious change because they forgot to include some items in some categories and all the data has been changed, all the way back to 2004. That means last month's data will not match.
Tracking inflation over months gives us this figure:
In April there was a sharp increase last year, and there is a sharp increase this year as well, with the green line's trend going back up. That is dangerous, but even more is:
Past Revisions Continue Upwards
We now have to deal with the fact that they had the data wrong, but notice how Inflation is very benign when they first announce it and later they modify it into frighteningly higher figures!
We have substantial differences - Feb was first announced at 8.3% and it's now 9.54% after the revision (which includes the data change). What has it done? The average inflation for 2010-11 - and remember, the March revision is still due - is now 9.52%.
Our interest rates have only now crossed to the 9.5% ranges above a year to maturity, at the retail level. In fact many banks don't even offer that much. The 1-year T-Bill offers around 8%. This means we have negative "real" rates even after this interest rate hike. Expect at least another 1% more.
The three broad categories of Inflation (Manufactured Goods has the highest weight at 65%) are shown below.
While inflation looks like it's moderating, I have a feeling revisions will come through and cream us later.
But Primary Articles inflation looks like its coming down, even if it's horribly high at 12%. Fuel Inflation at 13.3% is increasing and is bound to go even further up after the recent petrol price increase and the eventual diesel and LPG increases.
The increase in Manufactured Goods seems benign but a lot of that is data that is not updated even now. More on that later.
Primary Articles at 12.05%
While Primary Articles moves down to 12% it remains a little too high for comfort.
Importantly Crude Petroleum prices have not been updated since December 2010. We all know that in the international market, crude prices are up 25% since then. Updating the crude price will add a big number to inflation since it's weight is 0.9%.
Cotton up 100%
Non Food articles saw the maximum move up at 27%, of the items in Primary Articles. In there:
Cotton's gone up over 100% since last year. The mills must hurt but have prices of clothes gone up too? Well of course they have, over in the manufactured goods area:
But while they have come down from last month, I believe it will take a few months for the higher cotton prices to hurt the textile and yarn products.
Fuels up 13%
The Fuel group is up 13.32% from last year, and it's even higher than March. The big change will come in May as retail fuel prices are updated.
Already some products are seeing massive increases where they aren't subsidized. ATF is up 47%, Lubricants and Naphtha are up about 30% each.
Another Data Suckage Issue: Coke prices aren't updated since April 2008.
Rubber Prices Still High
Raw Rubber prices were up 46% and it's starting to flow into Manufactured Products as well:
Plastics, meanwhile, are benign for now.
Go Ahead and Explore
At MarketVision's Interactive Inflation Map for April 2011.
Do let us know your comments!