Rise in retail, wholesale inflation dashes rate-cut hopes

Expensive fruits and vegetables pushed up wholesale and retail inflation rates in March, dashing industry's hopes of a rate cut by the RBI in its forthcoming monetary policy review in June.
While wholesale inflation in March rose to a three-month high of 5.7 per cent, retail inflation inched up to 8.31 per cent after softening for three straight months since December.
Although the Reserve Bank of India, which has been refraining from cutting rates because of heightened inflation, may wait for some more time, India Inc wants the central bank to take a view in the backdrop of the slowing economy.

Snapping a declining trend, the wholesale price index (WPI) rose in March due to a spurt in prices of food items such as potato, onion and fruits. Inflation in food items was 9.9 per cent in March against 8.12 per cent in the previous month.
WPI inflation, which had been declining since December, had eased to a nine-month low of 4.68 per cent in February, according to government data released today.
Retail inflation, as measured by the Consumer Price Index (CPI), rose to 8.31 per cent from 8.03 in February, driven by rising prices of fruits and vegetables.

Inflation in the food basket, including beverages, increased to 9.1 per cent in March from 8.57 per cent in the previous month.

"Unless food inflation is brought under control, we could see a lasting impact on the overall growth scenario," Ficci President Sidharth Birla said.
"The central bank must take a more nuanced stand on its reading of the growth-inflation dynamics as we are fast losing ground with regard to performance of the industrial sector. Along with growth of the industrial economy, we also have on stake sufficient employment generation," he added.