Aided by a drop in prices of food and fuel items, wholesale price index (WPI)-based inflation for April eased to a lower-than-expected 5.2 per cent from 5.7 per cent last month. However, it was far higher than the 4.77 per cent recorded last April.

The easing was in contrast to consumer price index-based inflation, which shot up to a three-month high of 5.59 per cent in April.

Despite the surprise on the WPI front, the Reserve Bank of India is unlikely to cut policy rates at its monetary policy review meeting on June 3, said economy watchers. This is because the RBI is looking at CPI-based inflation as the main anchor for monetary policy management.

Fuel inflation had declined to 8.93 per cent in April from 11.22 per cent in March, while food-article inflation declined to 8.64 per cent (9.9 per cent). The overall inflation in vegetables eased to 1.34 per cent (8.57 per cent). Core inflation, however, was quite sticky at 3.4 per cent (3.5 per cent).

Meanwhile, the WPI for February now stands revised upwards to 5.03 per cent from the 4.68 per cent projected earlier, official data showed.

Finance Secretary Arvind Mayaram hoped that inflation would continue to decline. He, however, pointed out that the Government would remain cautious about any monsoon deficit.

Assocham said addressing supply side constraints would be a challenge for the new Government.

FICCI President Sidharth Birla said given the recent increase in diesel prices and uncertain outlook for monsoon, price movements will have to be closely watched.

srivats.kr@thehindu.co.in

(This article was published on May 15, 2014)
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