Wholesale prices decline for 17th month, 0.85% in March

Food inflation, however, up at 3.73% in March

Wholesale prices fell for a 17th straight month in March, declining 0.85 per cent against 0.91 per cent in February.

The Wholesale Price Index (WPI) had recorded deflation for a full year in 1975-76. WPI last showed inflation 18 months earlier in October 2014 at 1.66 per cent.

Read more from our special coverage on "WPI"

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Official data released on Monday showed deflation had stood at 2.33 per cent in the corresponding period of the previous year.

For the full 2015-16, WPI deflation stood at 2.50 per cent on an average, compared to 2.05 per cent of inflation in the previous financial year, according a note by YES Bank.

Pressure points remained in food, inflation, which accelerated to 3.73 per cent in March from 3.35 per cent in February. However, this was lower than 6.27 per cent in the corresponding period of the previous year.

Retail inflation had also eased to a six-month low of 4.83 per cent in March from 5.26 per cent in February, data released recently showed. Food inflation, biggest component of the Consumer Price Index, eased to 5.21 per cent in March, from 5.30 per cent in February, unlike its WPI trajectory.

Indian Meteorological Department has predicted over normal monsoon for 2016 and fairly distribution pattern of the rains. If the prediction comes true, food inflation may come down quite a bit once monsoon starts from June and leave room for the Reserve Bank of India to cut interest rates further.

Prices of pulses, which provided the inflationary push among food articles in 2015-16, continued to rise steeply by 34.45 per cent in March, although at a slower pace than the 38.84 per cent in February and 44.81 per cent in January.

Prices of onions declined by 17.65 per cent in March, after dropping 13.22 per cent in February and 5.51 per cent in January.

Inflation in both commodities had peaked in October.

The eggs, meat and fish sub-category made up for the second fastest rise in food prices in March at 3.69 per cent.

Vegetable prices fell 2.26 per cent in March after a 3.34 per cent decline in February. Potato prices recovered after seven months of straight declines to rise 3.57 per cent in March after falling 6.28 per cent in February.

Non-food inflation in the primary category (those found in raw form) rose by 8.09 per cent in March, higher than the 5.88 per cent seen the previous month.

Prices of manufactured products, which have a combined weight of 65 per cent in the index, declined 0.13 per cent in March, year on year, against fall of 0.58 per cent in February. The deflation had stood at 0.19 per cent in the corresponding month of the previous year.  The manufactured food products sub-category, which includes sugar and edible oils, registered a marginal rise of 4.47 per cent. This was mainly due to sugar prices, which rose 6.19 per cent, exhibiting inflationary tendencies for the first time after many months.

Another area where prices remained depressed was fuel and power. In fact, price fall accelerated to 8.30 per cent in March, from 6.40 per cent in February. Components like liquefied natural gas, petrol and diesel fell on global cues. Petrol prices fell by 9.87 per cent in March, against decline of just 1.03 per cent in February.

“While the trajectory of crude oil prices remains crucial, at present, we expect WPI inflation to print in a narrow range of +/- 0.5% in Q1FY17,” Icra senior economist Aditi Nayar said.