Bolstering further case for RBI putting key policy rates on hold in upcoming monetary policy on April 1 after easing Retail inflation data, the annual rate of inflation, based on monthly WPI, cooled to multi month low at 4.68% (provisional) for the month of February, 2014 (over February, 2013) as compared to 5.05% (provisional) for the previous month and 7.28% during the corresponding month of the previous year. The figures encouragingly were lower than street expectation of sub 5% number at 4.9% for February. However, December inflation figures were revised upwards to 6.40% against 6.16% earlier.
The decline in headline inflation figure was on account of easing prices in food articles, which declined by 0.3% to 232.9 (provisional) from 233.6 (provisional) for the previous month that dragged Primary article index, which occupies 20.12% weight in the overall headline index, lower by 0.1% to 238.6 (provisional) from 238.9 (provisional) for the previous month. Meanwhile, the index for ‘Non-Food Articles’ group rose by 0.6 percent to 217.4 (provisional) from 216.0 (provisional) for the previous month.
Further, Fuel & Power, having weight of 14.91%, too declined by 0.1% to 212.6 (provisional) in month under review from 212.8 (provisional) for the previous month due to lower price of coking coal (7%), aviation turbine fuel, kerosene and electricity (agricultural) (2% each) and LPG (1%). However, petrol and high speed diesel (1% each) moved up. However, the index of Manufactured Products, which occupies 64.97% of weight in the overall index, rose by 0.1% 152.7 (provisional) from 152.6 (provisional) for the previous month.
However, in a sign of worry, Core WPI, has been hardening. The figure, which stood at 2.8% in December, edged higher to 3% in January, before finally coming at 3.2% in February. Nevertheless, the latest figure would do some help to reduce some flak towards Congress party-led ruling alliance, which faces an uphill battle in a general election due by May. Earlier in the month, Retail Inflation cooled off to 25 month low of 8.10% in Feb, while IIP posted its first growth in previous four months during January.
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