New Delhi: Inflation based on wholesale price index (WPI) remained in the negative territory for the fourth straight month in February coming at minus two per cent due to fall in prices of fuel and manufactured products.
This has prompted the industry to demand that the RBI cuts interest rates to boost the economy.
“Headline WPI continued in the negative territory, but in the Indian context we should stop short of calling this a deflation. This is just a dis-inflation, created out of a sharp drop in global commodity prices in the midst of not too strong depreciation pressures on the Rupee,” said Kotak Mahindra Bank, chief economist Indranil Pan.
But despite overall WPI being in negative, there is still upward pressure on some food articles which affects the common man.
Onion prices rose by 26.58 per cent in February, fruits by 16.84 per cent, vegetable prices went up by 15.54 per cent and pulses by 14.59 per cent. The unseasonal rains in March could further push up food prices as there are reports of crop being damaged. Inflation based on WPI was at -0.39 per cent in January, -0.50 per cent in December and -0.17 per cent in November.
The core WPI moderated to 0.1 per cent, which indicates low pricing power of companies. However, the pace of drop in WPI inflation is stronger than retail (CPI) inflation as the former incorporates more tradeable.
