India’s inflation based on the Wholesale Price Index — which tracks the price of goods sold in bulk — rose for a second consecutive month owing to a rise in fuel prices.
In line with expectation, as the rise in fuel prices reflect in the commodity prices, the Wholesale Price Index (WPI) rose to 3.18 per cent in March from 2.93 per cent in February.
Fuel prices grew by 5.4 per cent as against 2.2 per cent in February 2019, said Reliance Securities. “The WPI is expected to approach 4 per cent levels, going ahead on account of higher food and manufacturing inflation.”
The research note also added that the food inflation shall continue to move northward, going ahead on the back of likely El Nino, which might prove to be a caution for the RBI’s monetary policy framework.
Food inflation spiked to 5.7 per cent as against 4.3 per cent on February 19 owing to higher vegetable prices.
However, the Reliance Security note expects manufacturing inflation to gradually soften, as concerns over global trade wars ease and a growth-oriented monetary policy continues to provide liquidity. Manufacturing inflation eased to 2.2 per cent YoY as against 2.3 per cent.
Last week, the benchmark Brent crude hit a 5 month high. It is currently trading at $71 per barrel mark.