Retail inflation in Delhi, J&K more than double national average: ASSOCHAM

Representative image.Representative image.
MANGALURU: The retail inflation may have been hovering at quite a reasonable level of 3.17% for January, 2017 on an all-India basis, but there is no respite for people right in Delhi along with a couple of other states, suffering the price rise at double the national average, with demonetization leaving its possible impact, an ASSOCHAM analysis has noted.

“Against the national average of 3.17%, Delhi had to bear the inflation rate, measured by the Consumer Price Index (CPI) at 6.32%, while it was 7.01% for Jammu and Kashmir (J&K) and 5.92% for Himachal Pradesh,” said the ASSOCHAM analysis of the inflation data.

It also noted that in the rural belt of the national capital, the CPI inflation was close to seven per cent at 6.85%. Similarly the rural areas of Jammu and Kashmir and HP which were quite high on the retail inflation chart, witnessed quite a high rate of price rise in January, 2017 year on year.

In J&K rural and far flung, the CPI inflation was 9.08% and for the similar areas of HP it was 6.17%, adds the ASSOCHAM.

“The CPI inflation for January, 2017 on an all India level is much lower at 3.17% than the one measured on the Wholesale Price Index, at 5.25%. One of the plausible reasons could be the impact of demonetization on the supply chain, “said ASSOCHAM President Sandeep Jajodia.

But, what is more surprising is the huge gap between retail inflation in Delhi and the national average. ” This was not expected at least in Delhi, especially when the phenomenon was not seen even in the neighbouring states of Haryana, UP and Punjab, thought it was slightly over four per cent in these states”, the chamber said, adding the demonetization would have led to supply chain disruption more in the national capital than other states.


Retail inflation slips to 3.17 per cent in January

NEW DELHI: Impacted by note ban, retail inflation fell to multi-year low of 3.17 per cent in January mainly on account of declining prices of food items including vegetables and pulses.

Retail inflation, measured in terms of Consumer Price Index (CPI), was at 3.41 per cent in December.

Last month’s inflation, down from 5.69 per cent in January 2016, was lowest in at least over three years.

Inflation in vegetables continued in the negative zone at (-)15.62 per cent as against (-)14.59 per cent a month earlier, as per the data from the Ministry of Statistics and Programme Implementation.

In pulses and products category also, the rate of price rise was negative at (-)6.62 per cent.

Inflation in fruits was higher at 5.81 per cent, fuel and light at 3.42 per cent. The rate of price rise in meat and fish was 2.98 per cent.

Government’s sudden announcement on November 8, 2016 to abolish old Rs 500 and Rs 1,000 notes, nearly 86 per cent of the total cash in circulation, dented demand in the consumer segment.

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Overall, Consumer Food Price Index was down at 0.53 per cent in January as against 1.37 per cent in December.

Rural retail inflation was at 3.36 per cent in January compared with 3.83 per cent preceding month. For urban sector, it was at stable at 2.90 per cent


Fed needs to get to inflation goal sooner: Charles Evans

Marriner S. Eccles Federal Reserve building in Washington, D.C.

The Federal Reserve may need to keep interest rates lower for longer to convince investors and the public that the central bank is serious about reaching its 2-percent inflation target, Chicago Federal Reserve Bank President Charles Evans suggested on Monday.

With inflation running too low both in the United States and globally, the Fed needs to show its commitment to achieving its inflation goal “sustainably, symmetrically, and sooner rather than later,” Evans said in slides prepared for a speech in Chicago.

Doing so, he said, might require “undershooting the unemployment rate (and) overshooting the inflation target.” Inflation has been running below 2 percent since 2012 and unemployment is currently at 5 percent, around where many economists believe is consistent with full employment.

Evans, who rotates into a voting spot on the Fed’s policy panel next year, has been among the Fed’s loudest voices for a patients and gradual approach to rate increases.

He did not refer to any personally preferred pace of rate hikes in his prepared slides, and instead said he would like to see the pace of rate hikes tied to progress on inflation.

Although the near-term outlook for economic growth is “relatively good,” he said, slower labor force growth and other factors are capping the potential for faster expansion in the future, forcing the Fed to keep rates low to nurture what growth there is.

So while short-term rates are only just above zero, monetary policy is not as accommodative as it might appear, and the Fed has less “headroom” to raise rates, he said.

The Fed last raised rates last December. Further rate increases, Evans suggested in his slides, should be tied to higher inflation readings, high readings on inflation expectations, and a decline in the unemployment rate.

Monday is the last day before a weeklong communications blackout that Fed officials observe before each regular policy meeting. The Fed next meets Nov. 1-2.

Traders and economists expect it to leave rates unchanged then, and to raise rates at the Fed’s December meeting.


Fed’s Tarullo says no rate hikes needed until inflation is more solid

Daniel Tarullo

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Daniel Tarullo

Federal Reserve Governor Daniel Tarullo on Wednesday said there is no need to raise U.S. interest rates until there is convincing evidenceinflation is moving towards the Fed’s target on a sustained basis.

Tarullo, who as a governor has a vote at every Fed policy meeting, said the cautious approach was particularly warranted as the world digests the impact of Britain’s vote to leave the European Union.

“I want to be more convinced that the underlying rate of inflation is around 2 percent,” Tarullo said at a Wall Street Journal event in Washington.

U.S. inflation outside of food and energy has edged higher since late 2015 but Tarullo said recent inflation movements were “not enough to convince me that the rate is heading in a non-transitory way to 2 percent.”

Fed officials and other central bankers are still digesting the fallout from Britain’s “Brexit” vote and Tarullo suggested it may be sometime before it is clear how that will impact different economies.

“We’ll have to watch and see over the medium term. There is a good bit of uncertainty,” he said.

The Fed held interest rates steady in June and cut the number of rate hikes it sees over the coming years, but still signaled two rate increases were likely this year. Many investors, however, doubt the Fed will raise rates at all this year.

While cautious about the outlook for inflation, Tarullo said world financial markets appeared well prepared for the impact of Brexit and that they are behaving well.

“None of us really knows the magnitude and I doubt there will be a moment when people say Brexit is done. It will be something that attenuates over time,” he said.