February wholesale inflation cools to 2.26% on food articles

India’s wholesale inflation eased to 2.26% in February, on the back of lower inflation in food articles especially onion and vegetables, data released by the commerce and industry ministry showed on Monday.

Wholesale price inflation was 3.1% in January.

The annual inflation, based on monthly wholesale price index (WPI), was 2.93% in February 2018.


Inflation in onions was 162.3% last month from 293.37% in January while that in vegetables it was 29.97% from 52.72% in January.

In manufactured products, which have a 64.23% weight in the index, the inflation was 0.42% and in fuel and power, it was 3.38%.

“An expected decline in the prices of crude oil and various commodities, the pass through of the same to core-WPI, and a continued correction in prices of some vegetables would result in the WPI inflation declining to sub-1% in March,” said Aditi Nayar, principal economist, ICRA.

Core WPI was a negative 0.8% last month. This is expected to reverse reflecting the growing impact of the coronavirus on prices, demand and sentiment.

However, protein-rich items showed a rise in inflation at 4.48% in milk and 6.88% in eggs, meat and fish compared to 3.7% and 6.73%, respectively in January.

Official data released last week showed the retail inflation rate slowing to 6.58% in February from 7.59% in January due to softer food inflation.

This, as per Nayar, suggests a high likelihood of a rate cut in the next policy meeting, in light of the growing concerns regarding economic growth as it would bolster sentiment to some extent, but modest transmission may result in a feeble impact on growth.

The higher duties on petrol and diesel will help to shore up government revenues, while preventing a sharper easing in inflationary pressures. The government on Saturday hiked excise duty on petrol and diesel by Rs 3 per litre.

The next monetary policy review is scheduled for the first week of April.