Good News, Food Prices Are Falling

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New Delhi: Deflating food prices softened India’s wholesale price-indexed (WPI) inflation to 2.47 per cent in March from 2.48 per cent reported for the previous month, official data showed on Monday.

“The annual rate of inflation, based on monthly WPI, stood at 2.47 per cent (provisional) for March 2018 (over March 2017) as compared to 2.48 per cent (provisional) for the previous month and 5.11 per cent during the corresponding month of the previous year,” the ministry said in its report.

The data disclosed that prices of food articles dipped by (-) 0.29 per cent from an acceleration of 0.88 per cent in the previous corresponding month.

Similarly, the protein-based food items such as eggs, meat and fish became cheaper by (-)0.82 per cent during the month. Prices of the other major group under the WPI, manufactured products, which comprise nearly 64.23 per cent of the index, recorded a 3.03 per cent rise. The sub-category of manufactured food products became dearer by 0.31 per cent.

In addition, the cost on fuel and power category, which commands a 13.15 per cent weightage in the index increased at a slower pace of 4.70 per cent from a growth of 22.35 per cent YoY. Product-wise, the price of high-speed diesel rose by 6.12 per cent during March while that of petrol climbed by 2.55 per cent and for LPG by (-) 9.08 per cent.

The CSO data revealed that the consumer food price index (CFPI) stood at 2.81 per cent in March compared to 3.26 per cent in February 2018.

According to industry body PHD Chamber, the consistent decline in WPI indicated “that the government has undertaken effective measures at the ground to address the supply side problems of the economy during the last few years”.

Sunil Kumar Sinha, Director, Public Finance and Principal Economist, India Ratings said: “Unlike the retail inflation which dipped by 16bp in March 2018 over the previous month, the wholesale inflation remained flat.”

“However, there are some noticeable changes at the disaggregate level. Inflation in the food article category which has been declining since November 2017 turned into deflation in March 2018 mainly driven by the sharp correction in the prices of fruits and vegetable.”

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