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Charts & Analysis

Consumer Price Inflation for Jul 2013 at 9.64%

The Consumer Price Index (CPI) for July 2013 shows inflation of 9.64%, marginally lower than the 9.87% in June. Wholesale price based inflation will come in on the 14th, but till now we’ve only see the gap widen.

WPI vs CPI

From a component perspective, we see food still at 11%, the biggest concern. Housing still remains in double digits at 10.6%, and transport costs have jumped 7.5%.

CPI Components July 2013

Finally, while rural inflation has declined slightly to 9.14%, urban inflation shows a rise to 11.56%.

CPI Rural vs. Urban Inflation

Impact: Oh come on, the 9.64% level is JUST TOO HIGH. Do whatever it takes to get this to zero or negative, even if you have to raise rates, contract money supply, sell dollars, whatever. This is just a clinically insane level now. People aren’t making any money even at 10% bank rates (post tax rates are much lower), and inflation will eat into corporate spending and cut growth severely.

It’s going to be Raghuram Rajan’s take on whether this CPI is what he looks at, or the ludicrously low WPI.

  • Punit Gupta says:

    Even at 10% food inflation is stated incorrectly. If you look around, food prices in restaurants have gone up anywhere from 15-25% in past 12 months. In few cases I have even noticed prices rising as high as 30-35% in past 12 months.

  • Madhu says:

    Sir,
    Is there a reason why there is huge difference between CPI and WPI?
    Thanks,
    Madhu

  • DrJeff says:

    I believe we have passed the point of no return, where deficit monetization will trigger velocity very soon. As debt to gnp has risen beyond 80% in most western economies, falling growth and tax revenue will accelerate the process. those who forget the past are destined to repeat it – over and over again.