New Delhi: India’s wholesale price inflation galloped to 7.39% in March, with prices of fuel as well as input costs for manufacturers rising at a time economic recovery is expected to get delayed with the escalating second wave of coronavirus pandemic.
In February, wholesale price index-based inflation was 4.17%.
Data released by the industry department showed fuel prices rose 10.25% during March, while prices of manufactured items increased by 7.34%. Among food items, prices of pulses (13.14%) and fruits (16.33%) rose sharply.
India’s retail inflation had accelerated to a four-month high at 5.52% in March as food prices quickened, data released by the National Statistical Office showed on Monday. Food inflation rose by 4.94% driven by protein items such as pulses, meat, fish and egg. Fuel prices increased by 4.5% in March while services inflation rose by 6.88% during the month.
This is the first set of inflation numbers after the government announced that it is keeping the inflation-targeting framework for the central bank unchanged for the five-year period beginning 1 April, ending speculation that a more relaxed inflation goal may be adopted to boost growth.
RBI in its latest monetary policy review has kept its policy rates unchanged sticking to its accommodative stance to focus on economic recovery from the worst recession in at least forty years in FY21. There is growing concern that the second wave of the coronavirus infections could derail the nascent economic recovery.
The RBI kept repo rate or its key lending rate at 4% while the reverse repo rate or its borrowing rate was left unchanged at 3.35%.
The Monetary Policy Committee last week said the evolving CPI inflation trajectory is likely to be subject to both upside and downside pressures. “The bumper foodgrains production in 2020-21 should sustain softening of cereal prices going forward. While the prices of pulses, particularly tur and urad, remain elevated, the incoming rabi harvest arrivals in the markets and the overall increase in domestic production in 2020-21 should augment supply which, along with imports, should enable some softening of these prices going forward.”
While edible oils inflation has been ruling at heightened levels with international prices remaining firm, reduction of import duties and appropriate incentives to enhance productivity domestically could work towards a better demand-supply balance over the medium-term. Pump prices of petroleum products have remained high. Reduction of excise duties and cesses and state level taxes could provide some relief to consumers on top of the recent easing of international crude prices. This could slow down the propagation of second-round effects. The impact of high international commodity prices and increased logistics costs are being felt across manufacturing and services, the MPC had added.
News Source:- Livemint