Inflation: Checkmate??!!

The rising trend in inflation in India for the time being seems to have been checkmated with current move of the government to increase the fuel prices by very small amounts and also due to the fact that non-basmati rice and maize rose marginally by Rs.30 per quintal: But this could have marginal negative impact on Poultry based scrips like Srinivasa Hatcheries Ltd or Rasoya Proteins Ltd: The Crude Oil price in the International Markets are expected to fall in the near future, as the sharp spike in the price of crude oil was less due to demand supply gap but more due to synthetic causes like geopolitical tensions, speculation and the weak dollar. The Greenback steadied on Friday, but the currency stayed in sight of a one-month low against the euro on inflation worries:

Petrol and diesel prices have been raised marginally by 3-5 paise per litre after the government decided to hike the commission paid to dealers for the sale of fuel. Dealers' commission effective midnight will be Rs 28 per kilolitre for petrol and Rs 31 per kilolitre for diesel, an Indian Oil Corporation official said. The effect of the increase in the commission will be rise in prices of petrol and diesel, effective midnightPetrol and diesel prices have been raised marginally by 3-5 paise per litre after the government decided to hike the commission paid to dealers for the sale of fuel. Dealers' commission effective midnight will be Rs 28 per kilolitre for petrol and Rs 31 per kilolitre for diesel, an Indian Oil Corporation official said. The wholesale prices of non-basmati rice and maize rose up to Rs 30 a quintal in the national capital on increased demand from retailers and consuming industries. In the rice section, non-basmati permal raw and permal wand prices were up by Rs 30 each to Rs 1450-1580 and Rs 1655-1800 per quintal. Rice Ir-8 variety traded Rs 25 higher at Rs 1300-1425 per quintal. Maize prices rose by Rs 20 to Rs 790-805 per quintal on demand from poultries.

However, if the crude prices continue to rise and the INR weaks further it could taper off the Indian Growth Story a little pushing the inflation up; since India imports several major items, including crude oil. It is worth mentionning that weakening rupee have already negated some of the earlier steps taken by the government, but a weak Rupee is helping Textile and Leather Companies who exports a sizable part of their produce/products/manufactured items. Meanwhile, the rupee, which was trading at a rate of Rs 40 to a dollar, has weakened to Rs 43 in a matter of few weeks.