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Mar WPI inflation down to -2.33%; food prices at 3-mnth low

The News International Team

Wholesale price index (WPI)-based inflation for March fell to a new low of -2.33 percent, the fourth successive month of deflating prices after the flat reading in November. The WPI reading for February was -2.06 percent.

A CNBC-TV18 poll of economists had forecast March WPI at -2.07 percent.

Economists say the latest number is proof that inflation is clearly trending lower, and this should provide the Reserve Bank of India room to cut rates.

“Whichever way you look at it (inflation), you will see very benign numbers for a significant period of time,” said Sidhartha Sanyal, Chief India Economist at Barclays in a discussion on CNBC-TV18.

January WPI inflation has been revised lower to -0.95 percent from -0.39 percent earlier

The adverse impact of unseasonal rains in February and March is yet to show in food inflation.

Food articles inflation in March fell to a three-month low of 6.31 percent against 7.74 percent in February.

“One should wait for one more month (to see the impact of unseasonal rains)..the early summer months is a bad time for food prices as they tend to go up,” said Sanyal.

“By and large, it looks like there are so many other buffers. So even if food prices go up a little, I do not see a major upside surprise in (inflation) numbers,” he said.

Vegetable inflation too declined to 9.68 percent from 15.54 percent in February. 

Manufactured products inflation hit a 68-month low of -0.19 percent.

“In terms of producer prices, we are continuously seeing an easing in core WPI, which is reflecting in the recessionary trend in the economy,” says Rupa Nitsure, Group Chief Economist, L&T Finance.

A snapshot of the components:

Non-food Articles Inflation At -7.12% Vs -5.55% (MoM)
Fuel, Power Group Inflation At -12.56% Vs -14.72% (MoM)
Manufactured Pdts Inflation At -0.19% Vs 0.33% (MoM)
Primary Articles Inflation At 0.08% Vs 1.43% (MoM)

Manufactured Products Index Down 0.1%
Non-food Articles Index Down 1.8%
Food Articles Index Down 0.4%
Fuel & Power Group Index Up 3.3%
Primary Articles Index Down 1%


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