March WPI up 3.18% on higher oil, food prices

New Delhi, The Wholesale Price Index-based inflation that tracks price of goods sold in bulk in India rose for the second consecutive month due to increase in food and fuel prices. As per the Commerce Ministry data, the wholesale price inflation rose to 3.18 per cent in March from 2.93 per cent in February.

On the year-on-year basis, in March wholesale price inflation increased at a faster rate than 2.74 per cent reported for the same month in 2018.

“The annual rate of inflation, based on monthly WPI, stood at 3.18 per cent (provisional) for March 2019 (over March 2018) as compared with 2.93 per cent (provisional) for February and 2.74 per cent during the same month of the previous year,” the Ministry said in its review of “Index Numbers of Wholesale Price in India”.

On YoY basis, the expenses on primary articles, which constitute 22.62 per cent of the WPI’s total weightage, increased to 5.07 per cent from 0.87 per cent.

The prices of food items increased at a faster rate. The category has a weightage of 15.26 per cent in the WPI index. It increased to 5.68 per cent from (-) 0.22 per cent.

While potatoes became dearer 1.30 per cent, onion prices deflated (-) 31.34 per cent. The overall vegetable prices in March rose 28.13 per cent against (-)2.70 per cent in the year-ago month.

The cost of fuel and power, which commands 13.15 per cent weightage, increased to 5.41 per cent against a rise of 4.70 per cent.

However, expenses on manufactured products registered a rise of 2.16 per cent against 3.12 per cent.

According to Reliance Securities: “The WPI is expected to approach 4 per cent on account of higher food and manufacturing inflation.”

It also noted the food inflation shall continue to move northward on the back of likely El Nino, which might prove to be a caution for the RBI’s monetary policy framework.

Reliance Security expects manufacturing inflation to gradually soften as concerns over global trade wars ease and a growth-oriented monetary policy continues to provide liquidity. Manufacturing inflation eased to 2.2 per cent YoY against 2.3 per cent.

“Like the previous month, once again higher food inflation in combination with fuel and power provided impetus to wholesale inflation,” said Sunil Kumar Sinha, Principal Economist, India Ratings and Research (Fitch group).

“The bigger push, however, came from food articles as items like wheat, jowar, bajra, maize and barley witnessed double-digit or near double-digit inflation since November 2018. Pulses also recorded the second consecutive month of double-digit inflation in March 2019.”

“With the probability of El Niño in 2019, inflation management may once again become a challenging task for the policy makers,” it said.