Wholesale price inflation slows down to 2.47% in March

Representational Image

Representational Image

On the basis of the Wholesale Price Index (WPI), inflation was 2.48 percent in February and 5.11 percent in March previous year. The latest WPI inflation print is the lowest since July 2017.

"For one, base effects which helped push down inflation in February, won't be as favourable".

The build up in inflation rate in the financial year so far was 2.47% compared to a build up rate of 5.11% in the corresponding period of the previous year.

Food articles inflation contracted in March 2018 at 0.29 per cent against 0.88 per cent in the previous month.

However, on a year-on-year (YoY) basis, the consumer price index (CPI) last month stood higher than the 3.89 percent reported in March 2017.

As per CSO data, inflation in the vegetables segment cooled to 11.7 per cent in March from 17.57 per cent in the previous month.

Sunil Sinha, Principal Economist, India Ratings & Research, said inflation in the food article category - which has been declining since November 2017- turned into deflation in March 2018. Inflation in the fuel and power basket, however, rose to 4.70 per cent in March from 3.81 per cent in February.

Moreover, the retail inflation eased to 4.28 per cent, a five-month low in March, but remained above RBI's medium-term target, supporting views that monetary policy is likely to remain unchanged at the next review in early June.

The official WPI for all commodities (Base: 2011-12 = 100) for the month of March 2018 rose by 0.2 per cent to 116.0 from previous month's level of 115.8, the data showed. The retail inflation slowed down mainly on account of easing food prices including vegetables.

Icra principal economist Aditi Nayar said the rise in global crude petroleum and natural gas prices, as well as the recent depreciation of the Indian rupee relative to the U.S. dollar, are likely to push up the WPI inflation in April 2018.

However, the extent of pass through of higher crude oil prices to retail fuel prices, in light of whether the uptick is absorbed by the oil marketing companies or cuts in excise/VAT are instituted by the Central or State Governments, remains to be seen, she added.

Prices of the other major group under the WPI, manufactured products, which comprise almost 64.23 per cent of the index, recorded a 3.03 per cent rise.

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