Inflation negative for 17th month at (-)0.85% in March

Continuing the deflationary trend for 17th month, WPI inflation was at (-)0.85% in March but may inch up gradually in the coming months on growing pressure on food and vegetable prices.

The Wholesale Price Index-based inflation rate in March was marginally higher at (-)0.91% in February. In March last year, it was (-)2.33%.

This is the 17th straight month since November 2014 when deflationary pressure persisted.

Food inflation stood at 3.73% in March compared with 3.35% in February, showed official data released on Monday.

Inflation rate for vegetables came in at (-)2.26% in March, while for cereals and pulses it was at 2.47% and 34.45% respectively.

India Ratings said that although prices of oil and manufactured items are expected to remain benign and keep the pressure on WPI inflation low, the same cannot be said about food inflation over the next few months despite the prediction of an above than normal monsoon.

"Prices of cereals have shown some escalation in March and with summer season setting in there will be pressure on vegetable/fruit prices to rise. As a result, WPI inflation is expected to move into positive territory next month but will remain in low single digit in the foreseeable future," said Sunil Kumar Sinha, Principal Economist, India Ratings.

The inflation print in the fuel and power segment was (-)8.30%, and for manufactured products, it read (-)0.13% in March.

Onion and fruits saw easing of prices, with these sub-indices falling by 17.65% and 2.13%, respectively.

Industry body Assocham said that although predictions of weather department are in favour of the ongoing Rabi season, policymakers should contain the upward price pressure if it surfaces in the coming months.