WPI inflation rises just 1 per cent for March reflecting slowing demand

New Delhi: Wholesale inflation in India eased to a four-month low in March as prices of food and non-food articles fell.

Inflation, as measured by the wholesale price index, was 1% in March, down from 2.26% in the preceding month, while food inflation fell to 4.91% from 7.79% in February, data released by the commerce and industry ministry on Wednesday showed.

“Due to outbreak of coronavirus and nationwide lockdown, the provisional figures of WPI for the latest month are computed with low response rate. The figures are likely to be revised in a significant manner during release of final month,” the ministry said in a statement.

“The moderation in the inflation at wholesale level has been aided by broad-based ease in inflation across segments, especially deflation in the fuel and power segment supported by benign global crude oil prices during the year,” said Madan Sab-navis, chief economist at CARE Ratings.

Inflation in vegetables was 11.9% in March compared with 29.97% in the previous month, while that in onion stayed high at 112.31% but was lower than 162.3% in February. However, pulses, potatoes and milk saw a rise in inflation last month.

The fuel and power basket saw deflation of 1.76%, while manufactured products saw inflation of 0.34%.

Disinflation ahead
In FY20, WPI inflation moderated to a four-year low of 1% after witnessing sustained pickup since FY16, as manufacturers lost their pricing power due to sluggish demand. Inflation in manufacturing was lowest in the last four years at 0.3%, from 2.2% in FY19, Sabnavis said.

Economists said that going ahead, deflationary factors would be at play rather than inflationary factors.

“At present, we expect the WPI to record a disinflation of 1.5% in FY21,” said Aditi Nayar, principal economist, ICRA.