India’s wholesale inflation eased in April on cheaper fuel and manufactured items, even as the pace of price rise quickened in the case of food articles, according to data released by the commerce and industry ministry on Tuesday. The Wholesale Price Index (WPI)-based inflation was pegged at 3.07% in April, down from 3.18% in the previous month and 3.62% in April 2018. Data released on Monday showed a marginal increase in retail inflation at 2.92% in April from 2.86% in March, dividing opinion on whether the Reserve Bank of India would cut interest rates in its next monetary policy review on June 6. “With international oil prices hovering at $71 per barrel, a depreciating currency and rising domestic food inflation, we believe RBI may wait out in the June policy to assess the evolving growth-inflation dynamics,” said Sameer Narang, chief economist, Bank of Baroda. The RBI had cut its key policy rates by identical 25 basis points in its two most recent policy reviews. India’s economy seems to have slowed sharply in recent months amid visible signs of weaker consumer spending.
FOOD INFLATION RISES
Inflation in food articles hardened with a 40.65% rise in prices of vegetables in April from 28.13% in the previous month. Inflation in food articles basket was 7.37%, significantly higher than 5.68% in the previous month. Higher food prices resulted in higher retail inflation, which scaled a six month high of 2.92% in April, showed data released on Monday, triggering hope that RBI may again cut repo rate. Inflation in fuel and power category, however, cooled to 3.84% from 5.41% in March. Manufactured items too saw easing of prices, with inflation at 1.72% in April, as against 2.16% in March. CARE Ratings expects wholesale inflation to increase in the coming months, chiefly driven by a rise in prices of food articles and fuel components. “Going ahead we do expect inflation in primary products to start moving up. Lower inflation for manufactured products is also indicative of sluggish demand,” CARE Ratings said in a note.
