March Inflation at 8.98%: MarketVision's Interactive Map

After our February article which got us a lot of email feedback (thanks!) we have a new interactive map for the March Inflation - the headline number came in at 8.98%.

You will see a lot of square boxes with different colours. The size of each box is its weight in the parent, and the colour is based on the inflation of that item as given below.

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Inflation at 8.98%

Headline Inflation Map

At the top most level

Overall, Primary Articles inflation has come down from the 14%+ in Feb to 13%, but Fuel's gone up from 11.5% to nearly 13% now. And the two of those just form 35% of the total WPI figure. The missing and more important area is:

Manufactured Goods Going Up!

Manufactured goods, which is a "secondary" item in that it contains elements that we use that are derived from primary articles (for example, if rubber is a primary article, tyres are secondary and so on). Manufactured goods is 65% of the index. Let's also look at overall long term component growth:

Inflation Components

You can see the green line perk up! In the last two years, the highest it has been at is 6.43% and in March 2011, it was 6.21%. That's up from the first reported figure of 3.95% in Jan. Which has now been revised, for January, to 5.19%. This brings us to:

Crazy Revisions Again!

In another weird twist, the inflation revisions have started to increase again - and January Inflation, first announced at 8.23%, is now revised up to 9.35%. This is scary.

Inflation Revisions

If they keep revising past data substantially, what can we trust? This reported inflation could be a couple percentage points higher. Even then, let's delve into some details.

Primary articles is up 13%, with Non food articles 26% higher

While a substantial part of Primary Articles is food, the non-food part such as fibers, crude, metallic minerals etc. have risen a lot in price, it seems.

Primary Articles Map

Let's go into the "Non-food articles" to explore:

Non-Food Articles

Here, the culprits are:

  • Logs and Timber (68%)
  • Coconut/Copra (63%)
  • Castor Seed (68%)
  • Jute, Coir, Silk (all > 24%)
  • Raw Rubber (near 50%)
  • Cotton (98%)

Can you imagine, if this pricing sustains, what it'll to clothing? Rubber prices are volatile, and they have started to see some slide after Japan's earthquake.

Minerals and Ores

Minerals Inflation

Crude is up only 6.33% (The spikes haven't really shown) but Iron and Copper ores are still up 20%+.

Fuels and Power

Fuel and Power Inflation 

  • As you can see, Petrol price hikes have started to impact us with that inflation at 23%.
  • ATF is up a whopping 45%
  • Kerosene is up 35%
  • Coking coal, whose prices were NOT present in the last update (that is, data was not updated).

This is a strange feature of our system. We update things like Coking coal, Non Coking coal and Coke, once a year. And when they do update it it's a huge whopping figure - Coking Coal's index value was at 134.6 since November 2009. Just this month, they updated it to 178.7 - an increase of 40%. It's obviously been going up, except they didn't bother collecting or reporting the data. No wonder inflation looks bad this month - but it should have looked bad much earlier if they got the prices right.

And get this - the price of COKE - not the cold drink - which is 0.6% of the index, has been at 234.6 since April 2008. I have a strong feeling this is not quite true. One day they'll say "oh" and report the actual figure, and then every economist worth his surname will come and say that this much inflation is not acceptable. We have to get our data more accurate than this.

Cotton Textiles Showing Red (27%)

Going from the high cotton prices (inflation there has been high for a while) you can see how garment prices are up.

Cotton Textiles Map

If you're out buying Cotton Trousers you seem to be in luck, but otherwise...

Rubber and Plastics Yet to Reflect Crude Prices

Rubber and Plastic Products Map

Crude price rises haven't impacted Rubber and Plastics yet (Crude is the base source). Rubber product prices are up from 6% to 7.15%, with tyre prices still benign. Plastics have very little inflation in general.

The End

of this post at least. I know some of you are tired.

Overall, inflation statistics are shady in that we don't have enough data. And of course we don't consider rent and salaries, since this is WPI , not CPI. But even then the trend is worrying, of inflation moving into manufactured goods, from the nearly 18 months of continuing primary articles inflation. Now, a crude spike and we're done.

Do let us know what you think!

(View the complete interactive inflation visualizer here!)

Comments

Hi Deepak Happened to come

Hi Deepak
Happened to come across your webpage recently and liked what i saw. The analysis was refreshingly different from the usual tripe one sees on TV or in the papers. Has wide range of analysis be it macro, markets or trading analytics.
As a follow up piece on the piece on the wpi, could you have a look at the CPI as well? I believe the basket itself is outdated, and it would be interesting to see any incongruities in its computation such as the one related to coking coal!
Cheers
Jayan

Hey Deepak, that's amazing to

Hey Deepak, that's amazing to see a lot of number crunching. And yes, I am one of those who got tired trying to digest those numbers :)

Your observation on Cocking Coal etc updated once a year is apt and have made me wonder why should that be so too.

Good research and looking forward for more from MarketVision. Wishing you all the very best in this new endeavor.