Deflating Food Prices Softened India’s Wholesale Price-Index

India’s (WPI) inflation indexed to 2.47 percent in March from 2.48 percent reported for the previous month, official data showed on Monday.

According to the Commerce Ministry data, the WPI inflation in March 2017 was more than double at 5.11 percent. “The annual rate of inflation, based on monthly WPI, stood at 2.47 percent (provisional) for March 2018 (over March 2017) as compared to 2.48 percent (provisional) for the previous month and 5.11 percent during the corresponding month of the previous year,” the ministry said in its report.

“Build up inflation rate in the financial year so far was 2.47 percent compared to a build-up rate of 5.11 percent in the corresponding period of the previous year.” On a sequential basis, expenses on primary articles, which constitute 22.62 percent of the WPI’s total weight, inched up by 0.24 percent, from an increase of 0.79 percent in February.

Prices of the other major group under the WPI manufactured products, which comprise nearly 64.23 percent of the index, recorded a 3.03 percent rise.

The data released by the Central Statistics Office (CSO) showed that lower food prices eased March retail inflation to 4.28 percent from 4.44 percent in February 2018. However, on a year-on-year (YoY) basis, the consumer price index (CPI) last month stood higher than the 3.89 percent reported in March 2017. The CSO data revealed that the consumer food price index (CFPI) stood at 2.81 percent in March compared to 3.26 percent in February 2018.

“A significant decline in the inflation of food articles including cereals and pulses is an indicator that the government has rightly focused agriculture sector,” Anil Khaitan, President, Ph.D. Chamber was quoted as saying in a statement.

“Going ahead, we look forward to the continuation of the favourable policy environment and further easing of monetary policy to strengthen the industrial growth and lower cost of borrowings for the businesses especially for the MSMEs.”

FMT-INDIA

Deflating Food Prices Softened India’s Wholesale Price-Index

Sunil Kumar Sinha, Director, Public Finance and Principal Economist, India Ratings said: “Unlike the retail inflation which dipped by 16bp in March 2018 over the previous month, the wholesale inflation remained flat.” “However, there are some noticeable changes at the disaggregate level.

Inflation in the food article category which has been declining since November 2017 turned into deflation in March 2018 mainly driven by the sharp correction in the prices of fruits and vegetable.” Aditi Nayar, Principal Economist, ICRA said: “A downturn in food and mineral prices helped to offset the unfavourable base effect and keep the wholesale inflation steady at 2.5 percent in March 2018.”

“After the surge seen in the previous month, the core-WPI inflation eased to a three month low 3.6 percent in March 2018 from 3.9 percent in February 2018, reflecting a favourable base effect as well as the trend in a number of sub-sectors with a substantial weight such as textiles, basic metals, fabricated metal products, and motor vehicles, trailers and semi-trailers etc.”

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