Inflation sinks to a record low

Our Bureau Updated - December 07, 2021 at 01:34 AM.

BL17_pg1_Inflation_WPI.eps

Aided by cheaper food, fuel and manufactured item prices, the wholesale prices index (WPI)-based inflation fell to record (-) 2.06 per cent in February — the fourth straight month when inflation has stayed in the negative zone.

This was also the lowest level of wholesale price inflation since it was tracked in 2005 series.

While the WPI-based inflation was (-) 0.39 per cent in January 2015, it was (-) 0.50 per cent in December and (-) 0.17 per cent in November last year.

The WPI-based inflation in February last year was 5.03 per cent

With inflation dropping to record lows, India Inc demanded further policy rate cuts by the Reserve Bank of India (RBI) to revive demand in the economy.

The central bank is due to meet next on April 7 for its monetary policy review.

The current deflation in WPI-based inflation is in sharp contrast to the trend in consumer price index (CPI)-based inflation which hit a four-month high in February at 5.37 per cent.

A large part of this gap comes on account of the different weightages for food in the two indices. While the weightage of food in WPI is 15, it is 50 in the case of CPI. Food prices have remained strong in recent months.

The sharp fall in WPI inflation is unlikely to nudge the RBI to cut policy rates for now.

A stronger-than-expected CPI print in February could slow down the pace of RBI’s rate cutting cycle, say economists.

Published on March 16, 2015 18:08