Inflation jumps in
India amid expectation
of more tightening
India’s inflation jumped again to a more than three-year high,
according to data on Friday, days ahead of a key meeting of
central bankers who are expected to tighten monetary policy
Annual inflation accelerated nearly two-tenths of a percentage
point to 7.33 percent for the week ended April 12, driven partly
by higher food costs.
High inflation has become a central political issue in India
with taming prices the key goal of the Congress-led government,
which faces general elections within a year and a clutch of
state polls in between.
India’s hundreds of millions of poor, whose support is vital at
voting time, have been hit hardest by the inflation surge.
The latest jump, which comes amid soaring global commodity
costs, was up from 7.14 percent the previous week according to
the Wholesale Price Index, the most watched cost monitor.
The rise comes as economists predict further monetary tightening
at the central bank’s annual policy meeting next Tuesday aimed
at checking inflation.
Last week, the central bank told commercial banks to hike cash
reserves to suck out excess money supply in a bid to cool
inflation that has more than doubled in four months.
It pushed the so-called cash reserve ratio up by 50 basis points
to a seven-year peak of eight percent, the latest in a series of
aggressive tightening steps.
India found some relief earlier in the week when it forecast a
record wheat and grain harvests which economists say should
bring down food prices in coming months.
However, Goldman Sachs’ Tushar Poddar has predicted another
quarter-point hike in the central bank’s main policy tool, the
repo rate, which it uses to lend to commercial banks, at its
policy meeting. Other economists have made similar forecasts.
The rate is already at 7.75 percent -- a six-year high.
The tightening has already hit economic expansion with some
economists saying growth could fall as low as seven percent in
this fiscal year to March 2009 from around 8.7-8.8 percent last
year and 9.6 percent the previous year.
Maruti profits slide in
Indian car maker Maruti Suzuki announced Thursday a 33.6 percent
fall in net profit in the fourth quarter, hit by increased
competition and rising input and depreciation costs.
Maruti, majority owned by Japan’s Suzuki Motor Corp., reported
net profit of 2.98 billion rupees (74 million dollars) against
4.49 billion rupees for the fourth quarter ended March 2007, on
sales of 50.69 billion rupees.
For the full-year 2007-2008, Maruti’s profit rose 10.9 percent
to 17.8 billion rupees on sales that climbed 23.2 percent to
188.23 billion rupees.
Maruti shares fell 15.2 rupees or two percent to close at
745.95, after recovering from the day’s low of 728.7. Its
earnings were seen as in-line with expectations.
Depreciation in the fourth quarter surged to 3.11 billion rupees
from 718.2 million rupees, the company said in a statement.
“For a tighter and more prudent financial reporting, the company
has voluntarily adopted shorter depreciation cycles for its
equipment and tooling assets,” it said.
Maruti, which commands the lion’s share of the fast-growing
Indian car market, posted record sales in the fiscal year
through to March 2008, at 764,842 vehicles.
“Maruti’s earnings met expectations. The company is likely to
show strong sales in the year to March 2009 with new products in
the pipeline,” said Abhishek Banerjee, an automobile analyst
with brokerage Religare Securities.
“Maruti’s strategy is focussed on rural market expansion and
innovation,” he said.
But competition is growing, notably from rivals Hyundai Motors
and Tata Motors.
Interest rate hikes and other measures to curb credit growth
amid high inflation have also slowed demand for cars in the
world’s second-fastest growing automobile market.
In December, Suzuki said it would launch its next new car from
India, aiming at European buyers, as it invests 1.8 billion
dollars in making India a global production hub.
Analysts forecast India will continue to be one of the world’s
fastest-expanding vehicle markets as middle-class incomes keep
climbing and the government builds new highways to criss-cross
Maruti Udyog changed its official name earlier this year to
Maruti Suzuki India.
New pipeline for Iranian gas
Pakistani Oil Minister Khawja Asif (R) and his
Indian counterpart Murli Deora (L) leave after the joint press
conference in Islamabad on April 25, 2008 after a meeting. Deora
arrived on a three day visit in Islamabad to discuss the
construction of a multi-billion dollar project to transport
Iranian gas across the subcontinent and also attend the
technical level talks on the four-nation Turkmenistan
Afghanistan Pakistan India (TAPI) gas pipeline project were held
on April 23-24 in Islamabad. AFP
unit limits rice purchases
Top retailer Wal-Mart’s Sam’s Club unit said Wednesday it is
limiting the amount of rice individual shoppers could buy at one
time, as rice prices hit new records around the world.
Sam’s Club said it had temporarily placed limits of four
20-pound (nine-kilogram) bags a person for jasmine, basmati, and
other long-grain white rice types.
“We currently have plenty of rice for Sam’s Club Members,” the
company said in a statement.
“However, like our competitors, we’re just taking the
precautionary step of limiting sales of the very large 20 pound
bags” of imported white rice, it said.
Sam’s Club, a members-only bulk retailer chain owned by
Wal-Mart, the world’s largest retailer, said smaller-sized bags
of rice were not affected by the restrictions; nor did they
extend to Wal-Mart stores.
“This temporary cap is intended to ensure there is plenty of
rice for all our members. No other items are affected.”
Chinese want cars that
glide through gridlock
Traffic gridlock is emerging as a challenge to auto sales in
China, with many potential buyers saying lack of space on the
country’s roads is a major factor in whether or not they will
buy a car.
Visitors to the ongoing Auto China 2008 in Beijing said they did
not plan to buy cars that were so large the ability to manoeuvre
“Hatchback cars are smaller and more convenient, especially when
parking space is limited and expensive,” said Jeff Hu, a
30-year-old product designer from Shanghai looking for a vehicle
for his family of three.
Clogged roads are a problem in all major Chinese cities. Beijing
has three million cars, while in Shanghai, the country’s largest
city, the number of automobiles increased 11.8 percent last year
to 1.2 million.
The congestion is gradually becoming a severe constraint on
expanding car ownership in China, according to Jia Xinguang, an
independent auto analyst based in Beijing.
“In the past, people were saying cars were not affordable. Then
it became ‘we can afford to buy but can’t afford to drive,’” he
said, referring to the price of gas, toll fees and other costs.
“Now it is ‘we can afford buying and driving, but we just can’t
move,’” he said.
The ability to buy a car is a sign of the rapid expansion of the
middle classes, one of the most visible reflections of China’s
According to estimates, the Chinese middle classes have grown
from 65 million to 80 million -- in just two years.
This means that middle class households -- defined in China as
having an annual income of 60,000 to 500,000 yuan (8,500 to
70,000 dollars) -- now make up six percent of the total
They are a major driver of auto sales in China, one of the most
promising markets in the world.
A total of 1.85 million vehicles were sold in China in the first
quarter of 2008, up 20 percent from a year earlier, as markets
elsewhere in the world slumped, according to organisers of the
Zhang Jian, a 29-year-old human resources executive and another
visitor to the auto show, is not buying a car just yet, mainly
because fuel prices are too high. But that’s not the only
“The traffic is too bad in Beijing. It’s better to take the
metro and save your time than driving and being stuck on the
road,” she said.
A slogan for a new model launched by Mazda -- “Zoom Zoom” --
hints at the promise of driving in a free and unhindered way,
observers said, noting it may be a sign of the times.
“The design of more and more cars will make the exterior as
small as possible while leaving the interior space relatively
large,” said Zhao Chenxi, a Shanghai-based auto analyst with
Not that people necessarily want their cars small.
“Traditionally Chinese people love big cars. Opting for small
ones is a forced choice,” he said.
The gridlock has now become so bad that some officials have
decided to abandon the laissez-faire attitude which has
otherwise characterised auto policies in many parts of the
In July last year, the mayor of Shenzhen, one of China’s
showpiece economic cities in the south, urged his 11 million
residents to stop buying cars in a bid to ease worsening traffic
and pollution woes.
“Stop buying cars,” Xu Zongheng, the city’s mayor was quoted as
saying, adding that people were buying vehicles “too quickly,”
with the number of cars already topping one million.
“Problems arising from the city’s traffic are mounting. I hope
residents take this into consideration when planning to buy
Gradually improving public transportation is also impacting many
people’s decisions on how to get around.
“I will drive if it’s less than two hours but will opt for
public transportation if it’s longer than that,” said Hu, the
Shanghai product designer.
Berliners to vote on historic airport’s
(AFP) - Berliners will
go to the polls Sunday to vote on a last-ditch bid to save the
German capital’s historic Tempelhof airport, the hub of the
Berlin airlift, from closure in October.
Tempelhof’s fans have called on local pride and vibrant memories
of the airport just outside the city centre in their campaign to
keep the vast facility -- the largest building in western Europe
-- up and running.
“Ich bin ein Berliner” -- late US president John F. Kennedy’s
defiant cry in defence of the embattled city during the Cold War
-- is just one slogan Tempelhof backers have adopted in pointing
to the airport’s inextricable link with the city’s history.
After Berlin was split into east and west following World War
II, the Allies ferried hundreds of thousands of tonnes of food,
coal and other supplies, mainly into Tempelhof, in a virtually
non-stop airlift when the Soviets blockaded West Berlin in 1948.
Even after the blockade was lifted, shipments continued until
September of that year to build up a surplus in case of a
Berliners who were children at the time fondly recall sweets
that floated down when “candy bomber” pilots tossed down small
bundles from their cockpits with handkerchief parachutes.
“We owe it to the Americans to keep Tempelhof open,” local
resident Roland Welt, 69, told AFP as he passed by the airport
“If the Berliners vote to maintain it, the government can’t
stand in our way.”
The referendum is not binding, however. But Tempelhof backers
hope that it will put pressure on Mayor Klaus Wowereit to
reverse decade-old plans to mothball the facility.
They have lost a series of court battles and see Sunday’s vote
as their last hope to gain a reprieve.
Last week, they won the support of conservative Chancellor
Angela Merkel, who in a rare move threw her weight behind a
citizens’ initiative for Tempelhof against the left-leaning
leaders of the city-state.
The airport’s proponents cite its unique Nazi-era architecture,
central location and historical legacy.
They suggest keeping it open for business commuters and have
proposed building a clinic at the site for wealthy foreign
patients seeking German care.
But Tempelhof only served 630,000 passengers in 2006, compared
to 12 million for Tegel airport on the city’s northwestern
fringe, and six million at Schoenefeld to the east.
Schoenefeld is to be expanded and modernised and become the
capital’s sole airport in 2011.
Opponents point to binding agreements to close Tempelhof in
favour of Schoenefeld and describe its central location as a
nuisance for residents and a security risk due to low-flying
planes in a heavily populated area.
They have called for the creation of a cultural centre and a
park on the sprawling grounds.
Polls show a slim majority of Berliners support Tempelhof’s
continued operation, particularly westerners and older voters.
Euro retreats in Asian
(AFP) - The euro dropped
against the dollar and the yen in Asian trade on Thursday after
weak manufacturing data and comments by European financial
officials, dealers said.
The euro fell to 1.5842 dollars in Tokyo morning trade from
1.5882 late on Wednesday in New York and to 164.03 yen from
The dollar was steady at 103.52 yen after 103.51.
The euro retreated after French central bank chief Christian
Noyer said Wednesday eurozone interest rates could “move in both
The single currency had risen on Tuesday after Noyer, who is
also a member of the ECB governing council, said that the bank
was ready to move on rates if necessary and aimed to bring
inflation back below 2.0 percent next year.
Speculators had taken the remarks as a hint at a possible ECB
rate hike and the euro, powered by fresh fears for the health of
the US economy, on Tuesday broke through the 1.60-dollar
threshold for the first-time.
Eurogroup chairman Jean-Claude Juncker voiced fresh concern
about the surging euro on Wednesday, calling the volatility
Weak eurozone manufacturing figures also weighed on the single
currency after the purchasing managers index fell to 50.8 in
April, the lowest since August 2005 and close to the sub-50
level that signals a contraction.
Even so some market watchers believe an ECB interest rate hike
remains likely because of elevated inflationary pressures.
“The market consensus is that the only way for interest rates to
go is up because the main focus is on long term inflation
worries in Europe,” said Ryohei Muramatsu, manager of
Commerzbank Group Treasury Asia in Tokyo.
The greenback was supported by renewed confidence on Wall Street
where stocks rebounded overnight on robust earnings news from
Boeing and as two big US insurance firms announced merger plans.
But Muramatsu said the optimism could prove short-lived as
jitters about the US economy and the health of its financial
system persist, with banks still reluctant to lend to each
another amid a global credit crunch.
“There is a negative downward spiral because higher borrowing
costs will pressure corporate earnings which will then affect
the overall economy,” he said.
Market players expect the US Federal Reserve to lower its
benchmark rate by 25 basis points next week, which would be a
smaller cut than at previous meetings where the central bank had
slashed rates by 50 or 75 basis points.
ADB lends US$ 105
million to China for infrastructure
(AFP) - The Asian Development Bank (ADB) will lend 105
million dollars to China to improve infrastructure in the
northwest Xinjiang Uygur Autonomous Region, the Manila based
lender said Friday.
The loan will focus on construction and rehabilation of road
networks and urban services in Alashankou, a major trade and
transport hub on the border with Kazakhstan, the Kanas region, a
scenic tourist destination and Yining City, the ADB said in a
“We aim to strengthen cross-border trade, tourism development,
and economic growth in order to raise living standards while
protecting the environment of the poorest and most remote parts
of the country,” ADB urban development specialist Amy Leung was
quoted as saying.
The ADB also said it had forged a new “country strategy
partnership” with China for 2008-2010 which puts emphasis on
energy effciency, environmental protection, economic growth and
development regional cooperation.
Apple posts billion-dollar profit as Macintosh
(AFP) - Apple on
Wednesday reported profits in the first three months of the year
topped one billion dollars as sales of Macintosh computers
climbed more than 50 percent.
The tech giant and maker of the hot-selling iPod music player
and iPhone said it earned 1.05 billion dollars, or 1.16 dollars
per share, on revenues of 7.51 billion dollars for the quarter
as compared to 770 million dollars, or 87 cents per share, in
the same quarter last year.
The results trounced analysts’ predictions that Apple’s profits
for the quarter would be 94 cents per share.
“We’re delighted to report 43 percent revenue growth and the
strongest March quarter revenue and earnings in Apple’s
history,” said Apple chief executive Steve Jobs, Apple’s chief
“With over 17 billion dollars in revenue for the first half of
our fiscal year, we have strong momentum to launch some terrific
new products in the coming quarters.”
Apple shipped 2.29 million Macintosh computers during the
quarter, 51 percent more of the machines than it shipped during
the same period in 2007. The iconic California company sole
1.703 million iPhones during the quarter.
Chief financial officer Peter Oppenheimer said Apple expects
revenues of 7.2 billion dollars and profits of a dollar per
share in the current quarter.
The profit outlook was weaker than analyst forecasts for
earnings of 1.10 dollars a share.
EU still eyes WTO
ministerial meeting by end-May
- The European Union said on Friday it still hoped ministers
would meet at the WTO at the end of May to end years of trade
liberalisation talks despite scepticism within its own ranks.
“There is a clear understanding that if we want to conclude
talks by the end of the year, then we need to have a ministerial
meeting by the end of May,” the EU’s ambassador to the World
Trade Organisation Eckhart Guth told AFP.
“We are still working on this assumption, though nothing is
guaranteed, nothing is set in stone,” he said.
The WTO’s Doha round of talks to reduce trade barriers was
launched in the Qatari capital in November 2001 with the aim of
reaching a deal by 2004, but has foundered ever since,
principally in disputes between developed and developing
countries on agricultural subsidies and industrial tariffs.
WTO Director General Pascal Lamy had initially hoped to bring
ministers to Geneva over Easter to decide on “modalities” -- the
key numbers for tariff cuts that would form the basis for any
But this timetable has repeatedly had to be put back as the
WTO’s 151 member states prove incapable of reaching consensus
despite intensive technical discussions.
In a sign of growing opposition within the bloc’s 27 member
states, Germany on Thursday added its voice to criticisms by
France of any proposed further cuts in subsidies to EU farmers.
“We agree with France that no agreement (at the WTO) is better
than a bad agreement,” said German state secretary for
agriculture Gert Lindemann.
But Guth said that there was no “Plan B” to the proposed
timetable or negotiating framework.
“If one starts talking about a Plan B now, it very quickly
becomes a self-fulfilling prophecy,” the EU ambassador said.
A ministerial meeting in late May is seen as the last chance,
otherwise the whole process will be overshadowed by the looming
US presidential elections.
In logistical terms, any delay beyond May could pose problems in
terms of accommodation for ministers and their teams, as
Switzerland will host the Euro 2008 football championships in
June with Geneva as one of the main venues.
A sign which reads ‘No Fuel’ is pictured at a
petrol station near to the Grangemouth Oil Refinery in
Grangemouth, central Scotland on April 25, 2008. Workers at the
oil refinery, one of the largest in Europe, are planning strike
action on April 27 and as a result the plant has been gradually
slowed down production for safety reasons. AFP