WPI Inflation Recorded at 2.38 Percent for February

Synopsis

According to the Ministry of Commerce and Industry, WPI inflation for February is 2.38%. This slight increase from January's 2.31% is driven by higher prices of manufactured goods and food articles. CPI inflation also dropped to 3.61%, indicating the potential for RBI rate cuts to stimulate economic growth.

Key Takeaways

WPI inflation is at 2.38% for February.
Food inflation has decreased month-on-month.
Fuel and power group inflation rose by 2.12%.
The CPI inflation rate is at 3.61%.
RBI's rate cut could encourage economic growth.

New Delhi, March 17 (NationPress) The annual inflation rate based on the Wholesale Price Index (WPI) stands at 2.38 percent for February, as per the data disclosed by the Ministry of Commerce and Industry on Monday.

The month-to-month WPI change in February saw a slight increase of 0.07 percent, compared to the 2.31 percent recorded in January.

According to the official statement, “The positive inflation rate observed in February is mainly attributed to rising prices of manufactured goods and food items compared to the same month last year.”

The month-on-month food inflation decreased in February, with prices dropping by 2.05 percent compared to January.

On the other hand, WPI inflation in the fuel and power sector rose by 2.12 percent in February compared to January.

Likewise, the index for the manufactured products group increased by 0.42 percent in February against January.

The final WPI inflation rate for December has been adjusted to 2.57 percent, as indicated by the numbers.

Concurrently, the year-on-year inflation rate derived from the Consumer Price Index (CPI) has dropped to a 7-month low of 3.61 percent in February, which is 0.65 percent lower than January's figure, due to further declines in food prices, according to data released last week.

The Reserve Bank of India (RBI) utilizes the CPI inflation rate to guide its monetary policy, as it reflects the actual prices faced by consumers in the market.

The food inflation in February reached its lowest point since May 2023, being 222 basis points lower than January, according to the official statement.

Fuel prices decreased throughout the month, reducing the financial pressure on households, with inflation recorded at -1.33 percent in February.

As retail inflation continues its downward trajectory and remains below the RBI’s target of 4 percent, the central bank may have more room to implement a rate cut to stimulate economic growth and foster job creation.

Last month, RBI Governor Sanjay Malhotra announced a 25 basis points reduction in the policy rate, lowering it from 6.5 percent to 6.25 percent during the monetary policy review, aimed at boosting growth amidst global uncertainties.

He indicated that inflation has decreased and is anticipated to further moderate, gradually aligning with the RBI’s 4 percent target.

This monetary policy decision seeks to maintain a careful balance between controlling inflation and enhancing growth in a slowing economy.

The Monetary Policy Committee (MPC) also unanimously chose to maintain a neutral stance and will concentrate on inflation while supporting growth. This approach will allow flexibility in responding to the macroeconomic landscape, Malhotra mentioned.