Right at the peak of the elections season, bad news on the inflation front is here to haunt the incumbent UPA Government. Growing at the fastest pace since December, wholesale price inflation hit 5.7 per cent in March. All major categories - food, fuel, and manufactured goods - showed accelerated price growth, according to the official data released here, indicating that inflation pressures in the economy continue to remain elevated.
Mirroring the trend in wholesale price inflation, retail prices inflation for March, also released by the government on Tuesday, came marginally higher at 8.31 per cent against 8.1 per cent in February.
The rise in March comes after three months of declining retail inflation trend. The corresponding figure was, however, much higher at 10.4 per cent in March 2013.
Inflation was a major issue during the assembly polls in Delhi in December, and the Opposition parties have consistently raked it up in their campaign.
Wholesale diesel prices grew at the rate of 14.6 per cent, while LPG prices were up 9.3 per cent. Wholesale food prices rose 9.9 per cent with rice up 12.6 per cent and vegetable prices inflation growth of 8.6 per cent. Consumer prices inflation in food, beverages and tobacco came at 9.1 per cent mainly on the back of vegetables retail prices inflation growing at 16.8 per cent and fruits prices rising at the rate of 19.2 per cent in March.
The rate of growth of wholesale inflation in primary articles (accounts for 20 per cent of the Wholesale Price Index or WPI) came in at 7.7 per cent in March against 6.3 per cent in the previous month.
Fuel and power prices, which account for 15 per cent of the index, rose 11.2 per cent against 8.8 per cent in February. However, retail fuel prices moderated in March. Consumer price inflation in March was 6.3 per cent for the category fuel and light.
The wholesale price of manufactured goods (accounts for the remaining 65 per cent of the index) grew at the rate of 3.2 per cent in March, its fastest pace since May, 2013. Wholesale manufactured goods inflation had come in at 2.8 per cent in February.
“This set of WPI numbers has implications for the near term monetary policy outlook,” said global rating agency Moody’s Analytics in a statement on the inflation numbers.
“The Reserve Bank has lately paid closer attention to the consumer prices, but the WPI is still important and can in some instances be a leading indicator of consumer prices.”
Confederation of Indian Industry (CII) Director-General Chandrajit Banerjee said in a statement here that this rise in WPI inflation had to be attributed to supply side constraints in the agricultural side since demand in the economy was weak — as is evident from all indicators of growth. The statement released listed the steps that the government must take to control food inflation: The revival of inflation, especially of food prices, calls for supply side initiatives to raise agriculture productivity, including augmenting investment in agri-infrastructure and improving supply side management, delisting perishables from Agriculture Produce Marketing Committee, encouraging foreign direct investment in retail which would boost agriculture production, and the like.
“While the CII has been raising these points for some time, we are yet to see significant actions on this front. Knowing how deep the impact of inflation goes in slowing down the economy, the CII would urge that policy actions are swift and decisive on this front,” Mr. Banerjee added.