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

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.