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Charts & Analysis

CPI Inflation Back in Double Digits (Aug 2012)

Consumer Prices are up 10.03% in August 2012 as the index goes back up into dangerous 10%+ levels from a sub-10% print last month. The "New" CPI (as in, it’s an index that’s only been introduced since Jan 2011) is now taking the route of the CPI and staying staunchly stubborn.

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Next, let’s see components.

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As you can see, the biggest item (with the biggest weight – the size of the circle is the weight in the CPI) is at 12%. This is the highest ever for the food index in the CPI.

Within food, it’s vegetables at 20%, Oils at 18% and Sugar at 17% that show you how widespread the situation is – it’s what everyone needs.

Housing, which obviously no one cares about, is at 11% and rising again after a few drops in earlier months. Recreation is at 3.2% must involve playing dead and not doing anything, because we all know how much more it costs today to get a movie or even park at a mall.

The last chart is our rural-urban divide, which are now both pointing in the same direction: Up.

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Looking at this, I would be utterly disappointed if the RBI cut rates next month. Consider also that the diesel price hike in September will seriously impact all prices. Rates need to stay high till we have finally tamed inflation.