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Fall in food prices eases WPI inflation, slips marginally to 2.47% in March

Among vegetables, tomatoes saw a price fall of 26.48 per cent in terms of the wholesale price index

Indivjal Dhasmana  |  New Delhi 

fruit and vegetables market, Inflation

Reflecting farmers’ woes, at least in some commodities such as tomatoes, wholesale price food items saw in March. This has pulled down the overall rate marginally to 2.47 per cent in March, from 2.48 per cent in February, even as oil more or less neutralised the impact of food

Food stood at 0.29 per cent in March, compared to of 0.88 per cent in February. Within food, vegetables saw at 2.70 per cent, against 5.26 per cent

Among vegetables, tomatoes saw a price fall of 26.48 per cent in terms of the wholesale price index (WPI). The index stood at 92.7 points in March, which meant prices of tomatoes, on an average, were less than those in 2011-12.

There were reports of aggrieved farmers dumping tomatoes from various parts of the country.

WPI is the best way to judge prices offered to farmers, given the statistical limitations.

Sunil Kumar Sinha, director, India Ratings and Research, said earlier it was the potato and now the tomato is adding distress to farmers.

Pulses have been witnessing for months now. The rate of deflation, though, came down to 20.58 per cent in March, from 24.51 per cent in the previous month.

Sinha said prices of many pulses are ruling below the minimum support price in some parts, including Madhya Pradesh.

However, food was offset by fuel prices, even as liquefied petroleum gas entered the deflationary zone. Fuel and power rose to 4.70 per cent in March, against 3.81 per cent in the previous month.

Fall in food prices eases WPI inflation, slips marginally to 2.47% in March

Sinha said with Brent crude oil prices going past $70 per barrel and the onset of summer likely to impact the prices of fruits and vegetables adversely, the trajectory over the coming few months will be crucial for the Reserve Bank of India to decide its policy stance of whether to remain in an extended pause mode on rates or change it.

Icra Principal Economist Aditi Nayar said the rise in global crude petroleum and natural gas prices, as well as the recent depreciation of the rupee relative to the dollar, are likely to push up the in April 2018.

“However, the extent of pass-through of higher crude oil prices to retail fuel prices, in light of whether the uptick is absorbed by oil marketing companies or cuts in excise/value added tax are instituted by the central or state governments, remains to be seen. We expect the average rate to rise to around 3.9 per cent in 2018-19, from 2.9 per cent in 2017-18,” Nayar said.

Core (in manufactured items sans food products) dropped to 3.5 per cent in March, from 3.9 per cent in the previous month. The trend is quite opposite to the one in retail price index, where core rose to a 43-month high in March.

Sinha said the divergence suggests that impulse of demand recovery at the moment is being felt at the retail level and not so much at the wholesale level.

However, if the firmness in the core at the retail level continues, it will soon begin to reflect at the wholesale level as well, he added.

First Published: Mon, April 16 2018. 21:11 IST
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