CPI inflation dips in March, though still in double digits

Declines to 10.39% snapping the five month rising trend

After touching a high of 10.91 per cent in February, consumer price index (CPI)-based inflation eased to 10.39 per cent in March. Though this snapped a five-month rising spree, CPI-based inflation remained in double digits for the fourth consecutive month. For 2012-13, it averaged 10.21 per cent.

With industrial growth showing no signs of a turnaround and CPI-based inflation declining, industry chambers today urged the central bank to cut the policy rate.

In March, food inflation eased to 12.42 per cent from 13.73 per cent in February, official data showed today. Barring cereals, fuel & light, no major category recorded single-digit inflation, data showed.

Food items have about 45 per cent weightage in CPI.

Inflation for vegetables was 12.16 per cent, cereals 17.55 per cent and eggs and non-vegetarian items 14.36 per cent. Overall inflation for fuel & light stood at 8.31 per cent; urban areas recorded 9.55 per cent inflation in this segment and rural areas 7.57 per cent.

“In March, the decline in CPI inflation is only moderate, and we should not read too much into it. When fuel prices rise, CPI inflation is likely to go up further”, said CARE Ratings chief economist Madan Sabnavis.

The data for wholesale price index (WPI)-based inflation for March is likely to be released on Monday. WPI-based inflation touched a four-year low of 6.62 per cent in January, it rose moderately to 6.84 per cent in February. For WPI inflation, the Reserve Bank of India (RBI)’s comfort level is five to six per cent.

Though WPI-based inflation rose in February and CPI-based inflation hit an all-time peak during the month, in its March 19 monetary policy review, RBI had cut the repo rate by 25 basis points. It had, however, said the headroom for future rate cuts was limited.

In March, inflation in urban areas was higher---CPI-based inflation stood at 10.38 per cent urban areas, against 10.33 per cent in rural areas. Food inflation in rural areas was 12.42 per cent, against 12.23 per cent in urban areas.