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Wholesale prices eased to a seven-month low of 2.48 per cent in February as food items and fuel became cheaper.
Wholesale price index (WPI)-based inflation was at 2.84 per cent in January 2018 and was at 5.52 per cent in February last year.
Inflation in the WPI Food Index, which consists of food items from the groups of primary and manufactured products, also decreased to 0.07 per cent in February from 1.65 per cent in January, according to official data on Wednesday.
Retail prices in February too had eased with consumer price index-based inflation falling to a four-month low of 4.44 per cent in February from 5.07 per cent in January.
WPI inflation in vegetables eased to 15.26 per cent in February from 40.77 per cent in January.
Wholesale inflation in onion slowed to 118.95 per cent, but rose marginally in the case of potato to 11.67 per cent.
WPI inflation in pulses contracted by 24.51 per cent, and also remained in the negative for other items including cereals, wheat and eggs; fish and meat too was in the negative zone.
Wholesale prices of ‘fuel and power’ segment softened to 3.81 per cent in February compared to 4.08 per cent in January.
However, WPI inflation for manufactured items was higher compared in February at 3.04 per cent compared to 2.78 per cent in January.
Analysts however, expect a spike in inflation in the coming months but said that with the current softening in both retail and wholesale prices, the Monetary Policy Committee of the Reserve Bank of India is likely to keep the repo rate unchanged in the upcoming policy review in April 2018.
Economists’ view
“An unfavourable base effect for crude petroleum and natural gas, and fuel and power is likely to push up the WPI inflation in March. 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,” said Aditi Nayar, Principal Economist, ICRA.
Similarly, CARE Ratings also said while food prices will remain stable in the coming months, inflationary threats could arise from increase in international oil or commodity prices, unseasonal weather patterns and increase in Minimum Support Prices for some crops.
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