The WPI inflati on stood at 9.9% in Mar ’10, remaining almost at the same level of Feb ’10 (9.89%). It is interesting to note that inflation for Jan ’10 has been revised significantly upward to 9.44%, up from 8.56% estimated earlier.
From Feb ’10, the indices for manufactured products and fuel increased by 0.3% and 1.4%, respectively, while that for primary articles declined by 0.5%
On an annual basis, in Mar ’10, overall food inflation (primary and manufactured) softened to 16.8%, down from 18.8% in Feb ’10. In the primary articles category, a major softening was noticed in tea (12%), arhar and masur (6% each), fruits & vegetables (5%), gram and eggs (4% each) and urad (3%). The index of manufactured food also decreased by 1.2% (mom) in Mar ’10 due to lower prices of sunflower oil (10%), hydrogenated vanaspati (5%) and sugar (4%).
Inflation outlook. As expected, considerable softening has been noticed in food prices in last two months. Food inflation has eased considerably to 16.8% in Mar ’10, from its peak of 21.9% reached in Dec ’09. As the Rabi (winter) crop has started entering the market, we expect further softening of food inflation in coming months. On the other hand, non-food inflation – non-food primary, fuel and manufacturing – is expected to firm up in next two months before it start softening. Overall, we expect inflation (final number) to peak between 10.5-11% by Apr’10 before reaching 6% by Nov ’10.
