Wholesale inflation falls for 17th month in March, chorus grows for rate cut

NEW DELHI: India’s wholesale inflation fell (-)0.85% in March, the 17th successive monthly decline, hit by falling fuel and manufactured product prices, government data released on Monday showed. Wholesale inflation had eased (-) 0.91% in February.

Wholesale food inflation grew 3.73% last month, higher than the previous month’s 3.35%, while wholesale prices of pulses shot up 34.45% from 38.84%. Prices of pulses are at a five-year high in some parts of the country, hit by storms last spring and a back-toback drought last summer. Since India mainly relies on imports to meet its domestic demand, any weather shock results in a big jump in prices.

Wholesale inflation rate, a marker for price movements in bulk buys for traders, broadly mirrors trends in shop-end prices over the last few months.

Data released last week showed that consumer price index (CPI)-based retail inflation, a measure of changes in shop-end prices, grew 4.83% in March, from 5.26% in February.

Falling inflation rates could prompt the RBI to cut lending rates further. Earlier this month, the RBI cut its key interest rate — the repo rate — to a five-year low of 6.5%, a move that would eventually lead to lower borrowing costs for home and car buyers.

Experts said inflation will stay low for the next few months, although vegetable and fruit prices could rise, since supplies usually slow down during the summer months. “With the summer season setting in, there will be pressure on vegetable and fruit prices to rise,” said Sunil Kumar Sinha, principal economist, India Ratings.