Wholesale price inflation eased to 5.7 per cent in March as prices of fuel and manufactured items declined.
WPI inflation was higher at 6.55 per cent in February. But, it was in the negative zone at -0.45 per cent in March 2016.
“Build-up inflation rate in the financial year so far was 5.7 per cent compared to a build-up rate of -0.45 per cent in the corresponding period of the previous year,” said an official statement on Monday.
However, inflation in food articles jumped up to 3.12 per cent in March compared to 2.69 per cent in February.
The data revealed that this was primarily due to higher prices of fruits and vegetables and ragi (5 per cent each), bajra (2 per cent) and egg, fish-marine and rice (1 per cent each).
Headline inflation in the fuel and power group also eased to 18.16 per cent in March as against 21.02 per cent in February. “However, the price of LPG (2 per cent) and aviation turbine fuel (1 per cent) moved up,” said the release. WPI inflation in the group manufactured products stood at 2.99 per cent in March versus 3.66 per cent in the previous month.
Analysts said that WPI inflation is likely to be in the range of 5 per cent in the coming months but monsoon will be crucial.
“We believe that there is an upside risk to the inflation with the increasing global commodity prices and expectation of possible below-normal monsoons. A clearer picture will emerge in July and August,” said CARE Ratings.
Expressing concern over the high fuel inflation, Sunil Sinha, Principal Economist, India Ratings said, “As the inflation trajectory of many food items is still unfolding and a lot will depend on the monsoon, the Reserve Bank of India is likely to remain in an extended pause mode as of now.”
The RBI now targets retail inflation.