Inflation based on wholesale prices slipped marginally to 2.47 per cent in March on falling prices of food items, especially vegetables and pulses. On the basis of Wholesale Price Index (WPI), inflation was 2.48 per cent in February and 5.11 per cent in March last year.
According to a government data released today, food articles witnessed deflation after about eight months as vegetables, cereals, pulses, eggs, meat and fish, turned cheaper.
Wholesale prices of food articles fell 0.29 per cent in March compared to a 0.88 per cent rise in the previous month.
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Deflation in pulses was 20.58 per cent, in vegetables (2.70 per cent), wheat (1.19 per cent) and egg, meat and fish (0.82 per cent) in March.
Inflation in onion continued to rule high at 42.22 per cent and in potato at 43.25 per cent. Manufactured products inflation was at 3.03 per cent even as sugar prices fell 10.48 per cent during the month.
However, rising crude oil prices pushed up inflation in the 'fuel and power' basket to 4.70 per cent in March from 3.81 per cent in the previous month.
Icra Principal Economist Aditi Nayar said the rise in global crude petroleum and natural gas prices, as well as the recent depreciation of the Indian Rupee relative to the US dollar, are likely to push up the WPI inflation in April 2018.
"However, the extent of pass through of higher crude oil prices to retail fuel prices, in light of whether the uptick is absorbed by oil marketing companies or cuts in excise/ VAT are instituted by the central or state governments, remains to be seen. We expect the average WPI inflation to rise to around 3.9 per cent in 2018-19 from 2.9 per cent in 2017-18," Nayar said.
Besides, January WPI inflation has been revised upwards to 3.02 per cent from the provisional estimate of 2.84 per cent.
As per data released last week, retail inflation slipped to a five-month low of 4.28 per cent in March on account of decline in food prices. The RBI takes into account retail inflation while deciding on monetary policy.
In its first monetary policy review for 2018-19, the Reserve Bank earlier this month maintained status quo on interest rate citing inflationary concerns. It revised downwards forecast for retail inflation to 4.7-5.1 per cent for April-September and 4.4 per cent for October-March.