Jan 2011 Monthly Inflation at 8.23%

The Jan Inflation Number went back to 8.23% from the December number of 8.43%. This sounds very bullish but I think the data is crappy.

Monthly Jan WPI at 8.23%

Let's look at the inflation components:

Inflation components

Primary articles zoomed up to 17%+. Fuel stayed high at 11%. Manufactured goods - and this is where the surprise is - went DOWN to 3.75%. This sounds bizarre. How can primary articles and fuel be up while manufactured goods is so low? Manufactured goods is over 64% of WPI, so obviously a dip in MG will impact inflation to push it down!

The culprit - "Food Products" which dropped by over 1%. How can food go up as a primary article, but food products go down? I don't know, but sugar is a good part of this index and sugar prices have come down. I'm not sure I believe the data here, but if manufactured goods is indeed going down, nothing is wrong; buy all the stocks you can buy.

They say this is no big deal and the RBI rate hikes will continue.

Oh, and past revisions took the announced November 7.48% figure to a revised 8.08%. Tough market, this is.