Inflation eases to 9-month low of 4.68 percent (Roundup)

New Delhi, March 14: India’s wholesale price-based inflation fell to 4.68 percent in February, the lowest level of increase in the last nine months, as food prices cooled down, government data showed Friday.

The main inflation indicator measured in terms of Wholesale Price Index (WPI) was at 5.05 percent during January and 7.28 percent during the corresponding month of the previous year.

The “food articles” group index declined by 0.3 percent during February due to lower price of poultry chicken, egg, gram and fruits and vegetables, the data showed.

According to data released by the ministry of commerce and industry here, there was a showdown in price escalation of food items like cereals, vegetables, pulses, wheat, potato, onions, fruits, egg, meat and fish.

During the month under review, cereals became costlier by 9.08 percent from 18.63 percent in the corresponding month of last year. Wheat prices became dearer by 6.52 percent in February from an increase of 21.81 percent in the like period of 2013.

Price of pulses reported a decrease of 4.12 percent during the month under review from a surge of 13.95 percent in February 2013. Vegetable prices gained by 3.99 percent from 19.88 percent year-on-year.

Potato became costlier by 8.36 percent from 50.14 percent year-on-year, while prices of onions declined by 20.06 percent from a whooping 182.36 percent in the corresponding month of 2013.

Fruits became costlier by 9.92 percent from 10.16 percent, egg, meat and fish prices were up 9.69 percent from 12.37 percent year-on-year.

However, milk prices rose by 8.45 percent from 4.52 percent and price of rice became dearer by 13.65 percent from 17.75 percent year-on-year.

Overall, food inflation was recorded at 8.12 percent from 11.95 percent in the corresponding month of last year. Inflation of primary articles was at 6.33 percent from an increase of 10.54 percent in February 2013.

Retail inflation has also eased in February, helped by slower rise in food prices.

The consumer price index-based inflation, or retail inflation, for February slowed to 8.10 percent as compared to 8.79 percent in the previous month, government data showed Wednesday.

Food inflation for February 2014 stood at 8.57 percent compared to 9.9 percent in January 2014.

Based on WPI index, fuel and power inflation was recorded at 8.75 percent in the month under review from 10.64 percent in February 2013.

Inflation of manufactured goods, that has 64.97 percent weight in WPI, was recorded at 2.76 percent last month from 4.80 percent February last year.

Industry body Federation of Indian Chambers of Commerce and Industry (FICCI) said that decline in wholesale price index should allow Reserve Bank of India (RBI) to ease key lending rates in its next monetary policy review meet which will be held on April 1.

“The decline in the WPI comes on the back of a similar trend observed in CPI (consumer price index) a few days back,” said Sidharth Birla, president, FICCI.

“This easing of inflation will hopefully create some space for monetary policy easing by the RBI. This is imperative as the sentiment of caution continues to weigh heavy on the minds of investors.”

Associated Chambers of Commerce and Industry of India (Assocham) said the further drop in WPI inflation in February has set a stage for RBI to go in for a cut in the policy interest rates in wake of the sharp deceleration in industrial demand.

“The sub-five per cent inflation is certainly good news for the macro economy and the focus should now shift back to growth which needs to be revived at the earliest,” said Assocham president Rana Kapoor.

“Barring cereals, which should also witness correction after the Rabi harvest, prices of the several other essential items have been reined in.”

IANS