In an encouraging development for the economy after lower than expected March CPI numbers, the annual rate of inflation, based on monthly wholesale price index (WPI) continued to show disinflationary trend by ebbing to all-time low level of -2.33% in March as compared to -2.06% witnessed in January and 6.00% during the corresponding month of the previous year. Meanwhile, build up inflation rate in the financial year so far was -2.33% compared to a build up rate of 6.00% in the corresponding period of the previous year. Meanwhile, January WPI inflation has been revised lower to -0.95% from -0.39% earlier. Wholesale Price Index for ‘All Commodities’ (Base: 2004-05 = 100) for the month of March, 2015 rose by 0.2 percent to 176.1 (provisional) from 175.8 (provisional) for the previous month.
The major fall came on the back of fall in food inflation which eased to three month low. Food articles inflation in March fell to a three-month low of 6.31% against 7.74% in February. Meanwhile, the index for primary articles, which occupies 20.12% weight in the overall index, declined by 1.0% to 239.6 (provisional) from 241.9 (provisional) for the previous month. Further the manufacturing products index, which occupies the maximum 64.97% weight in the overall index declined by 0.1% to 153.9 (provisional) from 154.1 (provisional) in February.
However, the index for Food & Fuel group, which contributes to 14.91% weight in the overall index, rose by 3.3% to 187.3 (provisional) from 181.3 (provisional) for the previous month due to higher price of aviation turbine fuel (10%), furnace oil (9%), high speed diesel (7%), petrol (6%), naphtha (4%) and kerosene (1%). However, the price of bitumen (6%) declined.
Notably, this is the fourth successive month of deflating prices after the flat reading in November, with the latest number being a proof that inflation is clearly trending lower and this should provide the Reserve Bank of India room to cut rates. Earlier in the week it was reported that retail inflation eased to a three-month low despite unseasonal rains pushing up vegetables prices slightly.
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