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Wholesale price index-based inflation surged for the second consecutive month at 3.18 per cent in March 2019 on costlier food and fuel prices.
The latest WPI print was higher than 2.93 per cent in February 2019 and 2.76 per cent in January this year. It was 2.74 percent in March last year .
Build up inflation rate in the financial year so far stood at 3.18 per cent as compared to 2.74 per cent in the same corresponding period in previous year.
Due to sharp rise in vegetable inflation at 28.13 per cent in March, food articles inflation rose to a three month high of 5.68 per cent in March 2019, higher than 4.28 per cent in February 2019 and 2.41 per cent in January this year.
Fuel and power’ category also saw spike in inflation to 5.41 per cent, from 2.23 per cent in February.
It may be recalled that retail inflation had accelerated to 2.86 per cent in March 2019 from 2.57 per cent in previous month.
RBI mainly factors in retail inflation for its monetary policy decisions.
Experts' take
Madan Sabnavis, Chief Economist, CARE Ratings said that WPI has shown an upward trend and this may be expected to persist.
Food prices have lost the base effect and will move up especially pulses and vegetables, Sabnavis told BusinessLine.
Fuel prices are also on the rise and hence WPI inflation will also continue to be higher than CPI inflation in next 2-3 months.
Low manufactured inflation indicates low pricing power of corporates, which has to be reversed, according to Sabnavis.
Sunil Kumar Sinha, Director --Public Finance and Principal Economist, India Ratings, said that like previous month once again higher food inflation in combination with fuel & power provided impetus to the wholesale inflation.
The bigger push however came from food articles where items like wheat, jowar, bajra, maize, and barley had been witnessing double digit or near double digit inflation since November 2018. Pulses also recorded second consecutive month of double digit inflation in March 2019. Within pulses, Arhar and Moong have now witnessed four month of consecutive double digit inflation, Sinha said.
The deflation witnessed in the perishable food items like vegetables since July2018 till January 2019 turned into inflation in February 2019. This jumped to a whopping 28.1 per cent in March 2019. Such an abrupt reversal in vegetable prices especially during the summer month is not new.
With the probability of El Niño looming on monsoon in 2019 inflation management may become a challenging task for the policy makers. However, today’s India Meteorological Department’s forecast of a near normal monsoon in 2019 should ease some pressure on this front. Also, the manufacturing and core inflation continues to be begin, Sinha said. Ind-Ra therefore believes further rate cut by the RBI would largely depend on whether the aforesaid risk to inflation materializes or not, he added.
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