Persistent deflationary pressures pulled down the rate of price rise to a record (-)2.06 percent in February – keeping inflation in the negative zone for the fourth straight month – on account of cheaper food, fuel and manufacturing products, raising industry clamour for further cuts in interest rate.
Inflation measured on wholesale price index (WPI) was at (-)0.39 percent in January, (-)0.50 percent in December and (-)0.17 percent in November.
It was 5.03 percent in February 2014.
With inflation dropping to record lows, industry demanded further easing of interest rates to boost industrial growth.
Experts cautioned however that unseasonal rains this month could be a dampener and the decline in food inflation may be short-lived, prompting the Reserve Bank to avoid lowering rates immediately.
“There is a low likelihood of a rate cut in the April monetary policy review, notwithstanding the lower-than- expected WPI print for February. We expect further repo rate cuts to be limited to 50 basis points in the remainder of 2015,” ICRA Senior Economist Aditi Nayar said.
As per official data released today, inflation in food articles category stood at 7.74 percent, and the in manufactured products category, it was 0.33 percent.
Fuel and power inflation saw significant cooling at (-)14.72 percent in February.
In the food basket, while inflation in onions, pulses and protein-rich items like egg, meat and fish inched upwards, vegetables, fruits and milk saw the rate of price rise decline during the month.
Inflation in vegetables stood at 15.54 percent in February, lower than 19.74 percent in the previous month.
Rate of price rise in potato was (-)3.56 percent as against 2.11 percent in January.
“The decline in food inflation will be short lived as unseasonal rains have already started to have an effect on production. We expect the government to act pro-actively as food inflation is likely move up from the next month onwards,” Deloitte (India) Senior Director Anis Chakravarty said.
