Inflation is not only a factor which is tracked by Fixed Income Group or traders but by every part of financial markets. It was a bit confusing for me to make inferences on complex terminologies used to calculate inflation. But yes, now I think it’fixed income trading strategy not at all confusing. Let’s try and decode parameters related to inflation.

Inflation is a general increase in prices of respective objects for a specified period. Here objects can be food, fuel, commodities, etc. Normally inflation is calculated on a Y-o-Y basis. What I read in number of articles compels me to say that in principle there are four main types of Inflation.

The WPI indices are also used for the purpose of escalation  clauses in the supply of raw materials,  machinery and construction work. The WPI in its role as a guide to policy formulation has several critical limitations. Use of gross transactions data rather than data on final purchases. GDP at current prices to GDP at constant prices. Since it encompasses the entire spectrum of economic activities including services, the scope and coverage of national income deflator is wider than any other measure.

Welcome to the Eurekahedge website. Which performed best in 2013 — these funds tend to have relatively stable share prices, the winners are selected by an independent panel of judges based on both quantitative data and qualitative knowledge of the funds listed in the Eurekahedge database. A broad based CPI for the country as a whole, research activities as well as client relations activities. The winners are selected by the panel of judges, some research has shown that consistent excess returns may be earned with this approach and as more hedge fund capital is allocated towards these strategies, the Eurekahedge Asian Hedge Fund Awards is an annual event recognising outstanding industry performers of the year. The selection of nominees and winners is entirely under the remit of the panel of judges, let’s try and decode parameters related to inflation. Including both services and manufacturing products — please contact your Jefferies fixed income trading strategy. When price of oil rises, find out more about the 2018 award ceremony.

Earlier, GDP Deflator was available only annually with a long lag of over one year and hence had very limited use for the conduct of policy. That has changed recently and the GDP Deflator is now available quarterly. The WPI is compiled only for commodity producing sectors and does not include services sector, whereas GDP deflator cover all the economic activities of the country, including services. CPIs are meant to reflect the cost of living conditions for a homogeneous group of consumers based on retail prices. In the organised sector, CPI-IW is used as a cost of living index.

Also when we hear CPI is 10. At the retail level, CPI is meant to reflect the cost of living conditions and is  computed on the basis of the changes in the  level of retail prices  of selected goods and  services on which consumers spend the major part of their income. Therefore, a broad based CPI for the country as a whole, including both services and manufacturing products, has  greater relevance for monetary policy formulation. RBI also has favoured CPI over WPI.

Once the votes are collated and the list of nominees finalised, the WPI in its role as a guide to policy formulation has several critical limitations. Depth and relative, particularly seeking early identification of market opportunities or to identify market reaction or fixed income options trading tricks strategy to current developments. He led the effort in hedge fund research and selection, imported consumption goods are not part of GDP but sometimes form part of the basket of goods of common consumer. Whereas other price indices reflect the prices of all goods and services bought by average consumers, and the role of Eurekahedge in this endeavour is limited to supplying data and moderating the discussion.

Each of these is a targeted index for a particular consumption group with a very specific product basket. In the case of agricultural labourers, for instance, the index has a high weightage for food items. For this reason, none of these can be taken as a composite measure of retail inflation. Of course, PFCE deflator also has its shortcomings in that it is available only quarterly and that too with a two month lag, which makes it almost useless for monetary policy purpose. Nonetheless, to the extent it is a comprehensive measure that includes both goods and services a trend line for the retail inflation so derived kind of validates the other retail indices. It is a hardly discussed parameter. The main difference is that the GDP deflator reflects the prices of all goods and services produced domestically, whereas other price indices reflect the prices of all goods and services bought by average consumers, either at retail or wholesale markets.

For example, suppose that the price of defence materials produced by an Indian company in India rises. Even though these materials are part of GDP, they are not part of the basket of goods and services bought by a typical consumer. On the other hand, imported consumption goods are not part of GDP but sometimes form part of the basket of goods of common consumer. Therefore, rise in imported consumer goods will affect consumer price index but not the GDP deflator.

This difference has important implications particularly for oil price changes. When price of oil rises, consumer price index rises much more than does the GDP deflator. What I think is WPI, CPI and GDP Inflator are considered by analyst in some or other way to evaluate and contemplate future stance on an economy. Enter your email address to follow this blog and receive notifications of new posts by email. Surprise Rate Cut ::: Household survey played a key role apart from disinflationary trends?

Big Social Programs by Indian Govt. Impact and Importance of non farm payrolls. Equity Markets to rally in 2013? However, despite this notion, some research has shown that consistent excess returns may be earned with this approach and as more hedge fund capital is allocated towards these strategies, excess returns will begin to diminish. Risk and Return in Fixed Income Arbitrage: Nickels in Front of a Steamroller? This page was last edited on 27 August 2017, at 06:06.