April 26, 2018

Inflation dips to 2.47 per cent in March

17 April 2018, 12:32 | Cesar Cruz

Wholesale Inflation stands at 2.47% in March; manufacturing index rises

Wholesale food prices in March fell 0.07% year-on-year compared with a 0.07% rise a month earlier

Inflation in "fuel and power" basket however rose to 4.70 percent in March from 3.81 percent in the previous month. For 2019, the forecast decreased to 4.07%, from 4.09% last week, after two decreases.

The build up in inflation rate in the financial year so far was 2.47% compared to a build up rate of 5.11% in the corresponding period of the previous year. The index for "Manufacture of Wearing Apparel" sub-group declined by 0.9 per cent to 137.8 from 139.0 for the previous month due to lower price of woven apparel, except fur apparel, and knitted and crocheted apparel (1 per cent each).

Despite keeping rates on hold, the committee said that "ongoing tightening of monetary policy" would be needed to bring inflation back to the Bank's 2 per cent target.

It may be recalled that WPI inflation was at 5.11 per cent in March a year ago.

Wholesale prices of food articles fell 0.29 per cent in March compared with a 0.88 per cent rise in February.

The overall prices have fallen, as food articles have turned cheaper in the last few months. The retail inflation slowed down mainly on account of easing food prices including vegetables.

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However, he said that core inflation dropped to 3.5 per cent in March 2018 from 3.9 per cent in February 2018.

According to a government data released today, food articles showed deflation at 0.29 percent in March as against a 0.88 percent inflation in the preceding month.

"The official Wholesale Price Index (WPI) for "All Commodities" for the month of March, 2018 rose by 0.2 per cent to 116.0 (provisional) from 115.8 (provisional) for the previous month", said the notification.

Inflation in onion continued to remain high at 42.22 per cent and in potato at 43.25 per cent.

Martin Beck, lead United Kingdom economist at Oxford Economics, said: "Although we think that 2018 as a whole will see a steady decline in price pressures, March may have proved an exception to that".

However, the extent of pass through of higher crude oil prices to retail fuel prices, in light of whether the uptick is absorbed by the oil marketing companies or cuts in excise/VAT are instituted by the Central or State Governments, remains to be seen, she added.

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