Definitely the drop in the WPI Headline is welcome and along with the recent corrections in the CPI, CAD and the trade figures point towards a trend of stabilization of the domestic economy. However, beyond the headline print, there is not much joy in the WPI print. The point to note is that most of the correction in the headline WPI inflation is on account of the vegetables segment and hence also reflected in a drop in food inflation to 8.12% from 8.60% in the last month. The core inflation print has come out to be higher in February at 3.15% from 3.01% in the last month and this is not too comforting. Given any lack of significant drops in the core WPI as also the core CPI, we do not expect any change in stance from the RBI at its monetary policy meeting on 1st April and also maintain a status-quo on rates.
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