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Wholesale inflation hits 8-month high at 7%

Inflation measures on the WPI hit its eight month's high in October at 7%. Just five months ago, it was 4.6% in May

Costlier food items, including vegetables, especially onions, pushed the wholesale price index (WPI) inflation to 7% in October, the highest in current financial year. It was just 4.6% five months ago in May. The rise in inflation in the recent months has been largely driven by inflation in primary articles and fuel.

 

The inflation measured on the WPI was 6.46% in the previous month and 7.32% in the October 2012.

 

According to the data released on Thursday, rate of price rise in food articles segment was at 18.19% in October.

 

The jump in WPI inflation comes after the October retail inflation increased to 10.1%, the highest in the past seven months. WPI inflation is on the rise since April this year.

 

"Looking ahead, we expect vegetable prices to further moderate from December, which should lower food inflation. However, this is likely to be offset by other factors. Domestic fuel prices remain suppressed and the release of this suppressed inflation (especially in diesel) will continue to drive fuel prices higher," said Nomura in a research note.

 

While inflation in the vegetable segment stood at 78.38% in October, the rate of price rise in onion continued to remain high at 278.21%.

 

Protein rich items like egg, meat and fish became dearer by 17.47% in October as against 13.37% in the previous month.

 

Food inflation moderated to 12.4% in October from 12.5% in September. Vegetable prices under WPI inflation moderated, suggesting that prices remain high at the retail level even as they moderate at the wholesale level. Fuel inflation rose to 10.3% from 10.1%, up 0.9% m-o-m, led by a surprise upward revision (by 8.8% m-o-m) in the electricity index. The electricity index has been revised up from the August reading, so we expect the September WPI print to also be revised higher.

 

During October 2013 primary articles reported inflation at 14.68%, a 30-month high, as compared to 13.54% in September 2013 and 7.81% in the corresponding period of the previous year. Food inflation continued to remain elevated at 18.19% as compared to 18.40% in September 2013 mainly owing to persistence of high vegetable and fruit inflation. Non-food primary articles reported an increase in inflation to 6.79% from 5.17% in the previous month. Also, inflation in minerals edged higher to 7.03% from slight deflation in September 2013, reflecting the lagged impact of currency depreciation.

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NPAs of 40 listed banks rise 38% to Rs1.3 lakh crore in H1

According to NPAsource.com, gross NPAs of listed banks have doubled since September 2011, while net NPAs have risen by 2.4 times or 140% during the same period

Net non-performing assets (NPAs) or bad loans in the banking system is likely to touch Rs1.5 lakh crore by March 2014 as two more quarters are remaining in the current fiscal year and the situation is worsening every quarter, says NPAsource.com.

 

According to a study conducted by the portal, NPAs of 40 listed banks jumped 38% or by around Rs35,424 crore during the first half of FY2014 due to high provisioning. Net NPAs of these lenders jumped to Rs1.3 lakh crore from Rs93,109 crore as on March 2013, says the study.
 

                                                                                                                   (Rs. Crore)

Bank

Sept 2013

Mar 2013

Amount Change

% Change

 

ING Vysya Bank

62

9

53

584.8

Bank of Maharashtra

1535

393

1142

290.7

Syndicate Bank

2547

1125

1422

126.4

United Bank

4385

1970

2415

122.6

Corporation Bank

2668

1411

1257

89.1

South Indian Bank

440

250

190

76.3

Kotak Mahindra Bank

547

311

236

75.8

IDBI Bank

5174

3100

2074

66.9

HDFC Bank

767

469

298

63.6

TOTAL – 40 Banks

1,28,533

93,109

35,424

38.0

 

"With interest rates expected to remain high at least for the remaining fiscal and Indian economy and corporates in poor shape, banks have a tough road ahead. Further, pressure on NPAs will come in next two quarters as many restructured loans of last year will get converted to NPAs," said Devendra K Jain, chairman and managing director of Atishya Group that owns NPAsource.com.

 

Gross NPAs as on September 2013 stood at Rs2.3 lakh crore, 27% higher when compared with Rs1.8 lakh crore as of March 2013 for these 40 listed banks. “It may be noted that the growth rate of net NPAs at 38% has been significantly higher than the 27% growth rate for gross NPAs,” Jain added.

 

NPAsource.com said gross NPAs of listed banks have doubled since September 2011; while net NPAs have risen by 2.4 times or 140% during the same period.

 

According to the study, top public sector banks like State Bank of India (SBI), Bank of Baroda (BoB), Punjab National Bank (PNB), Central Bank of India, IDBI Bank and Union Bank of India have all reported more than 30% rise in net NPAs during this period.

 

Out of the total 40 listed banks, 14 banks have reported more than 50% jump in net NPAs during the first six months of FY14. According to analysis done by NPAsource.com, the share of the top ten banks in net NPAs has come down to 67.8% in September from 70% in March 2013. NPAsource.com analysis also shows that net NPA of seven banks was higher than 3.5% as on September 2013 as against none as of March 2013.

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