The rising prices of non-food products is a matter of concern, with the food prices being kept within the overall average inflation mark, said in an analysis report prepared by Knowledge Management Department of National Commodity & Derivatives Exchange Ltd (NCDEX), a leading agri-commodities futures exchange in the country.
The inflation rate for the week ending March 3 2008 was 5.11%. Inflation has been virtually all encompassing with manufactured products displaying the lowest increase in prices.
“One of the main concerns is the rising food prices with primary articles increasing by 6.9%. The other two categories i.e. fuel products as well as manufactured goods have shown increases of 5.5% and 4.2% respectively and non-food products prices have registered an increase of 12.5%,” KMD report said. Basic metals and alloys witnessed an increase of 7.4% in prices during this period, which was again related to the movement of international prices. Prices of lead and iron and steel rose 33% and 8.7% respectively while those of aluminium, zinc and nickel had fallen during this period. The other manufactured products that have shown a high price rise are rubber and plastic products (8.1%) and cement (5.1%). Prices of transport equipment were up by 4.6% while those of metal products and machinery were subdued at 3.6% and 3.9% respectively.
The prices of primary commodities are driven by and large by economic fundamentals, which can be juxtaposed with the price increases for various products. However, the price of soy oil has risen by just 3.1%. The other oil prices have risen sharply namely: imported oil (42%), rice bran (38.5%), gingelly (36.4%), mustard (26%) and sunflower oil (18%). The repercussions of higher oilseeds prices have been seen in the manufactured products sub-group edible oils where prices have risen by 15.8%. Carryover stock of various oil and oilseeds is lower for the current oil year (October 2007 – Sept 08) as compared to previous period. Tariff value (base value) for most of the imported oil has not been revised upward since September 2006 though international prices have moved by more then 100 % during last two years.
On the other hand, import duty (import duty is calculated by taking the tariff value) on imported oil has been reduced at regular interval and today it stands at 45 % for CPO and 40 % for degummed soy oil.