Inflation based on the wholesale price index slipped to 5.70 per cent in March as manufactured goods showed cost decline even as food prices hardened. The WPI inflation, reflecting the annual rate of price rise, in February was 6.55 per cent. In March 2016, the print came in at (-)0.45 per cent. According to official data released today, food prices saw a sharp rise of 3.12 per cent in March compared to 2.69 per cent in the previous month. This is primarily because of a steep price jump in vegetables where inflation stood at 5.70 per cent. As for fruits, the figure was also high at 7.62 per cent, while for egg, meat and fish, it was 3.12 per cent.
Fuel inflation declined to 18.16 per cent, from 21.02 per cent in February. The manufactured items witnessed some softening in price rise, with inflation at 2.99 per cent in March, as against 3.66 per cent in the previous month. The government also revised upwards January inflation to 5.53 per cent from the provisional estimate of 5.25 per cent. Earlier this month, the Reserve Bank had left key policy rate unchanged at 6.25 per cent for the third review in a row citing upside risks to inflation.
It had, however, increased the reverse repo rate — which it pays to banks for parking funds with it — by 0.25 per cent to 6 per cent, narrowing the policy rate corridor. For 2017-18, it projected retail inflation to average 4.5 per cent in the first half and 5 per cent in the second half. Data released last week showed that retail inflation touched a five-month high of 3.81 per cent in March on costlier food items and non-food products like fuel and light. RBI frames its monetary policy stance on the basis of retail inflation.