Besides food inflation, prices of fuel and manufactured products continued to fall compared to their year-ago level. Photo: Ramesh Pathania/Mint
New Delhi: Wholesale price inflation fell for the fifth straight month in March, as manufactured products inflation fell into the negative zone for the first time.
In March, the Wholesale Price Index (WPI)-based inflation stood at -2.33% against -2.06% in February, as prices of fuel and manufactured products continued to fall from year-ago levels.
While fuel inflation stood at -12.56% in March against -14.72% a month ago, manufactured products inflation stood at -0.19% in March compared to 0.33% a month ago. Food inflation decelerated to 6.31% in March compared with 7.74% in February.
Retail inflation surprisingly eased to a three-month low in March as food prices softened, despite the damage to spring harvest in more than 14 states following unseasonal rainfall and hailstorms in the month, raising hopes of further monetary easing by the central bank in its next policy review in June.
Retail prices rose 5.17% in March, slower than a 5.37% increase in the preceding month, the ministry of statistics said on Monday. Food inflation slowed to 6.14% in March from 6.88% a month ago.
The Reserve Bank of India (RBI) kept its benchmark policy rate unchanged at 7.5% on 7 April and said it would wait for banks to pass on interest rate cuts that have already been announced before further easing.
Some of the biggest banks in India have pared their base rate marginally since then.
RBI governor Raghuram Rajan, in his monetary policy statement, cautioned that there are upside risks to the central projection emanating from possible intensification of El Nino conditions leading to a less than normal monsoon; large deviations in vegetable and fruit prices from their regular seasonal patterns, given unseasonal rains; larger-than-anticipated administered price revisions; faster closing of the output gap; geopolitical developments leading to hardening of global commodity prices; and spillover from external developments through exchange rate and asset price channels.
"However, at this juncture, these upside risks appear to be offset by downsides originating from global deflationary/disinflationary tendencies, the still soft outlook on global commodity prices; and slack in the domestic economy," he added.
The chance of a possible El Nino—which is strongly associated with lower rainfall in India's monsoon season—has risen to 70%, the US government's weather forecaster said on Thursday.
The US National Oceanic Atmospheric Administration in its earlier advisory in March had predicted a 50% chance of El Niño continuing in the northern hemisphere summer, which was in line with the forecast of Australia's Bureau of Meteorology.
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