WPI inflation drops to 29-month low of 1.34% in march

WPI inflation eased to a 29-month low of 1.34% in March, making it the 10th straight month of decline in WPI-based inflation. The food index inflation eased to 2.32 per cent in March from 2.76 per cent in February 2023.

The annual Wholesale Price Index (WPI)-based inflation declined as input prices continued to moderate, government data showed on Monday. The WPI inflation data was 3.85 per cent in February, 4.73 per cent in January 2023, and 14.63 per cent in March 2022.

The food index inflation eased to 2.32 per cent in March from 2.76 per cent in February. For the primary articles segment, the inflation rate cooled to 2.40 per cent in March 2023 versus 3.28 per cent in February.

Easing prices of manufactured products and fuel items led to the fall, even though food articles turned expensive. "Decline in the rate of inflation in March 2023 is primarily contributed by fall in prices of basic metals, food products, textiles, non-food articles, minerals, rubber & plastic products, crude petroleum & natural gas and paper and paper products," the commerce and industry ministry said.

The headline WPI inflation for March eased to its lowest level since October 2020, when the rate of price rise was 1.31 per cent. Last month, inflation in food articles rose to 5.48 per cent as against 3.81 per cent in February.

Among food items, although inflation in vegetables, onion and potato remained in negative, the rate of price rise was higher than that in February. In case of vegetables, it was at (-)2.22 per cent in March, higher than (-)21.53 per cent in February. In onion, inflation was (-)36.83 per cent in March, higher than (-)40.14 per cent in the previous month. Inflation in wheat and pulses was 9.16 per cent and 3.03 per cent, respectively, while in oilseeds it was (-)15.05 per cent in March 2023.

As per government data, fuel and power basket inflation eased to 8.96 per cent in March from 14.82 per cent in February. In manufactured products, inflation was (-)0.77 per cent as against 1.94 per cent. The deceleration in WPI comes in line with the easing of March retail inflation. Consumer price index based retail inflation declined to a 15-month low of 5.66 per cent in March from 6.44 per cent in February.

In its monetary policy review earlier this month, RBI cautioned that adverse climatic conditions are a risk to the future inflation trajectory and predicted milk prices to remain firm going into the summer due to tight demand-supply situation and fodder cost pressure. The central bank also paused the interest rate hike, holding the benchmark rate at 6.50 per cent. It projected retail inflation to average 5.2 per cent in current fiscal year.

The WPI measures the price of a representative basket of wholesale goods in India. The index is divided into three groups namely primary articles (22.6 per cent of total weight), fuel and power (13.2 per cent) and manufactured products (64.2 per cent).

Recently, India's retail inflation cooled to below the Reserve Bank of India's upper tolerance level of 6 per cent for the first time in three months, to 5.66 per cent in March supported by a favourable base and easing pent-up demand.