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The Wholesale Price Index (WPI)-based inflation came in at 2.47 per cent for March 2018, below market expectations. This latest WPI inflation print is the lowest since July 2017. In February this year, WPI inflation had come in at 2.48 per cent.
It may be recalled that WPI had come in at 5.11 per cent in March last year.
Meanwhile, manufactured products inflation for March 2018 came in at 3.03 per cent, lower than 3.22 per cent in the same month last year. Food articles inflation contracted in March 2018 at 0.29 per cent.
Meanwhile, the WPI for January 2018 has been revised upwards to 3.02 per cent from a level of 2.84 percent (provisional) earlier.
Experts' take
Sunil Sinha, Principal Economist, India Ratings & Research, said that inflation in the food article category —which has been declining since November 2017— turned into deflation in March 2018.
This was mainly driven by the sharp correction in prices of fruits and vegetables.
Aditi Nayar, Principal Economist, ICRA, said that a downturn in food and mineral prices helped to offset the unfavourable base effect and keep the wholesale inflation steady at 2.5 per cent in March 2018.
Primary food articles recorded a year-on-year (YOY) disinflation after a gap of eight months in March 2018, dampened by a YoY contraction in all of the major categories (namely vegetables, cereals, pulses, eggs, meat and fish, other food articles, and condiments and spices) except for fruits and milk, she said.
Nayar said that the rise in global crude petroleum and natural gas prices, as well as the recent depreciation of the INR relative to the USD, is likely to push the WPI inflation up 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 the OMCs or cuts in excise/VAT are instituted by the Central or State Governments, remains to be seen, she added.
“At present, we expect the average WPI inflation to rise to around 3.9 per cent in 2018-19 from 2.9 per cent in 2017-18”, Nayar said.
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