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.