New Delhi: Inflation based on wholesale price index (WPI) entered into positive territory for the first time after 18 months in April at 0.34 per cent due to costlier food articles. The rise in inflation has made any chance of a cut in interest rate by RBI bleaker.
Food inflation in April rose to 4.23 per cent from 3.73 per cent in March due to costlier pulses (up by 36.36 per cent) and potato (up by 35.45 per cent) among others. Sugar prices were also up by 16.07 per cent.
“Headline WPI inflation turned positive in April 2016, and exceeded our expectations of a mildly negative print (-0.3 per cent), following a sharper than anticipated rise in food and core inflation,” said Aditi Nayar, senior economist at rating agency ICRA.
“The considerable rise in prices of perishables such as fruits and vegetables can be attributed to the onset of summer as well as the drought like conditions in a significant number of districts,” she said.
“With the forecast of a delayed onset of the monsoon compounding the concern arising from the uptick in CPI and WPI inflation in April 2016, we expect the RBI would leave the policy rate unchanged in the upcoming policy review,” the senior economist added.
Deloitte India, senior economist, Richa Gupta said that inflation at the wholesale level printing in at a positive number “almost rules out chances of monetary easing in the near term especially after retail inflation also registered a higher than expected level last week.”
“The fine print shows that the rise is due to sequential increases in prices of food items and manufactured items. On the food side there were some alarming signals as pulses saw an increase of close to four per cent from the previous month showing that supply constraints in certain pockets can lead to flaring up of food inflation,” she said.
