WPI in­fla­tion eases to 2.47% in March on cheaper food items

Financial Chronicle - - PLAN, POLICY -

CON­TIN­U­ING with the down­ward trend, in­fla­tion based on whole­sale prices de­clined marginally to 2.47 per cent in March on fall­ing prices of food items, es­pe­cially veg­eta­bles and pulses. Ac­cord­ing to gov­ern­ment data, WPI in­fla­tion in March was more than dou­ble at 5.11 per cent.

“The an­nual rate of in­fla­tion, based on monthly WPI, stood at 2.47 per cent (pro­vi­sional) for March (over March 2017) com­pared with 2.48 per cent (pro­vi­sional) for the pre­vi­ous month and 5.11 per cent dur­ing the cor­re­spond­ing month of the pre­vi­ous year,” the com­merce min­istry said in its re­port.

The over­all prices have fallen, as food ar­ti­cles have turned cheaper in the last few months. The of­fi­cial data showed that food ar­ti­cles wit­nessed de­fla­tion af­ter about 8 months as veg­eta­bles, ce­re­als, pulses, eggs, meat and fish, turned cheaper.

Whole­sale prices of food ar­ti­cles fell 0.29 per cent in March com­pared with a 0.88 per cent rise in Fe­bru­ary. De­fla­tion in pulses was 20.58 per cent, veg­eta­bles (2.70 per cent), wheat (1.19 per cent) and egg, meat and fish (0.82 per cent) in March.

In­fla­tion in onion con­tin­ued to re­main high at 42.22 per cent and in potato at 43.25 per cent. Man­u­fac­tured prod­ucts in­fla­tion was at 3.03 per cent even as sugar prices fell 10.48 per cent dur­ing the month, as per the monthly data.

Ris­ing crude prices, how­ever, pushed up in­fla­tion in the ‘fuel and power’ bas­ket to 4.70 per cent in March from 3.81 per cent in the pre­vi­ous month.

Aditi Na­yar, prin­ci­pal econ­o­mist at re­search firm Icra, said the rise in global crude petroleum and nat­u­ral gas prices, as well as the re­cent de­pre­ci­a­tion of the ru­pee rel­a­tive to the 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 oil mar­ket­ing com­pa­nies or cuts in ex­cise/VAT are in­sti­tuted by cen­tral or state gov­ern­ments, re­mains to be seen. We ex­pect the av­er­age WPI in­fla­tion to rise to 3.9 per cent in 2018-19 from 2.9 per cent in 2017-18,” Na­yar said.

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