Food Inflation Push WPI To 2.38% in February

New Delhi, Mar 18 (KNN) India's wholesale price index (WPI)-based inflation inched up to 2.38 per cent in February from 2.31 per cent in January, driven by an increase in manufactured product prices and a narrowing deflation in fuel costs, according to government data released on Monday.

The rise in WPI inflation was mainly influenced by higher prices in the manufactured products category, which holds a significant weight of 64.2 per cent in the index. Inflation in this segment increased to 2.86 per cent in February from 2.51 per cent in January.

Notable price hikes were observed in food products (11.06 per cent), vegetable and animal fats (33.6 per cent), tobacco (2.74 per cent), paper products (2.1 per cent), chemicals and chemical products (1.26 per cent), and semi-finished steel (0.51 per cent).

Rajani Sinha, chief economist at CARE Ratings, attributed this rise to a surge in industrial metal prices, stating, "The Bloomberg Commodity Price Index rose by 4.1 per cent in January and 9.2 per cent in February, reversing the deflationary trend seen over the last six months. Going forward, geopolitical developments and global trade uncertainties will play a crucial role in shaping commodity markets and supply chains."

Meanwhile, food inflation eased to 3.38 per cent in February from 5.88 per cent in January. The price deceleration was seen in cereals (6.77 per cent), paddy (5.17 per cent), wheat (9.58 per cent), pulses (-1.04 per cent), and vegetables (-5.8 per cent). However, onions (48.05 per cent) and fruits (20.88 per cent) saw price acceleration.

Sinha noted that favorable agricultural production, fresh Rabi harvest, and sufficient reservoir levels are positive signs for food inflation but cautioned against potential weather-related disruptions.

In the fuel and power category, deflation narrowed to -0.71 per cent in February from -2.78 per cent in January. Cooking gas prices slowed (0.9 per cent), while petrol (-4.21 per cent) and high-speed diesel (-3.2 per cent) continued to contract.

Madan Sabnavis, chief economist at Bank of Baroda, highlighted a rise in core inflation to 1.3 per cent in March from 0.9 per cent in February.

He warned of market volatility amid ongoing trade tensions and uncertainty over US Federal Reserve rate cuts, which could further influence commodity prices in the coming months.

(KNN Bureau)