Inflation at the wholesale level, measured by the wholesale price index (WPI), fell for the first time to 5.7 per cent in March 2017 after recording a rise in the three months prior to that period. Wholesale inflation stood at 6.6 per cent in February 2017 although it was in negative territory, at -0.45 per cent, in March 2016. The build-up inflation rate in the financial year so far was 5.70 per cent compared to a build-up rate of -0.45 per cent in the corresponding period of the previous year.
According to Pankaj Patel, President of the Federation of Indian Chambers of Commerce and Industry (FICCI), "commodities prices -- crude as well as metal prices -- had been edging up, putting pressure on wholesale prices over the past few months. However, the WPI-based inflation announced today shows a decline from the previous month and this can be attributed to softening of inflation in fuel and power and manufactured goods segments. Further, the recent strengthening of rupee vis-à-vis the USD will also contribute towards limiting imported inflation".
Inflation in the fuel group declined to 18.2 per cent in March 2017 from 21.02 per cent in the preceding month. The primary articles group also saw a 37 basis points decrease in inflation. Similarly, inflation in the wholesale prices of manufactured products fell to 3 per cent from 3.7 per cent in February.
"Food inflation, however, has increased a bit, and this would require greater monitoring in light of the evolving weather conditions. The government is keeping a close tab on the progress made on irrigation projects, cold chain projects, and so on, and improvement in these areas is likely to yield positive results. The focus on drip irrigation and micro-irrigation, along with improvement in the efficiency of cropping patterns and water use mechanisms, will strengthen agricultural production and productivity," added Patel.
However, inflation in food articles marginally increased to 3.1 per cent from 2.7 per cent from the previous month due to higher price of fruits and vegetables and ragi (5 per cent each) and bajra (2 per cent).
Inflation in non-food articles group declined by 1.8 per cent compared to the previous month on account of lower price of flowers, which declined 22 per cent over the period.