The wholesale price index-based inflation jumped to a 39-month high of 6.55% in February compared to 5.25% in the previous month on the back of expensive food and fuel items, even as manufacturing products saw a decline in inflation. The data justifies the Reserve Bank of India’s caution on loose monetary stance amid expected increase in interest rates in the United States in the next few days.
Expectations are that the consumer price index-based inflation would also break its six-month declining spree in February on the support of food prices. The data for CPI inflation would come later Tuesday, PTI reported.
ICRA, a credit rating services in India, principal economist Aditi Nayar pegged CPI inflation at 3.9% in February against 3.2% in January. With this, the gap between WPI and CPI, which has been widening in the last few months, would narrow down.
In fact, food has a higher weight of over 45% in CPI than just 14.3% in WPI. In WPI, food inflation rose from 1.3% in January to 5% in February as cereals and fruits turned expensive at the rising rate.
In fact, vegetables continued to see a fall in prices in February though at a decreasing rate. Deflation in vegetables (decrease in prices) came down to 8% in February against 32.3% in January. Pulses also saw deflation of 0.8% against inflation of 6.2% in these months.
Non-food articles, comprising fiber, minerals, saw inflation rising to 6.5% in February against almost 2% in January. Similarly, fuel items turned expensive by 21% against 18.1% in these months. However, manufacturing products saw inflation falling to 3.66% against 3.99%.
Explaining the reasons, Nayar said the rupee had strengthened against the dollar in February against January which made imports of these products cheaper. A dollar was equal to Rs 68.1 on an average in January, while the value came down to Rs 66.9 in February.
Also, global metal prices trends were mixed against the rising spree it saw in earlier months, she said.
Also, the category of chemicals and chemical products rose by 0.4% to 151.5 (provisional) from 150.9 for the previous month due to higher price of non-cyclic compound (4%), turpentine oil (3%) and basic organic chemicals, synthetic resin, explosives, ayurvedic medicines and toilet soap (1% each). However, the price of rubber chemicals and pesticides (1% each) declined.