March WPI inflation accelerates to three-month high of 5.7%

Limiting central bank’s scope for easing policy rates, the annual rate of inflation, based on monthly WPI, accelerated to three months high of 5.70% in March, 2014 from its multi month low level of 4.68% (provisional) seen in February, 2014 and as compared to 5.65% during the corresponding month of the previous year. The figures were higher than street expectation of 5.20%. However, January inflation figures were revised upwards to 5.17% against 5.05% earlier. Meanwhile, build up inflation rate in the financial year so far was 5.70% compared to a build up rate of 5.65% in the corresponding period of the previous year. The acceleration in headline inflation figure was on account of rise in prices of food articles group, which rose by 1.0 percent to 235.3 (provisional) from 232.9 for the previous month that lifted Primary article index, which occupies 20.12% weight in the overall headline index, higher by 0.7% to 240.2 (provisional) from 238.6 (provisional) for the previous month. The index for Non-Food Articles group declined by 0.1% to 217.2 (provisional) from 217.4 (provisional) for the previous month. Further, index of Fuel & Power, too contributed to the rise of overall headline inflation number. The group’s index, which has weight of 14.91% in the overall index, rose by 0.2% to  213.1 (provisional) from 212.6 (provisional) for the previous month due to higher price of high speed diesel and petrol (1% each).  However, the price of kerosene (2%), bitumen and LPG (1% each) declined. Additionally, the index of Manufactured Products, which occupies 64.97% of weight in the overall index, rose by 0.5% to 153.5 (provisional) from 152.7 for February. The latest figure would reduce scope of Reserve Bank of India (RBI) supporting the industries with any rate cuts amid fresh signs of slowdown. India has been battling a prolonged spell of high inflation and low growth, which is expected to remain stubborn as food inflation may yet again see a rise in the coming month with El Nino hitting the monsoon.