Wholesale price index-based inflation hit the negative zone for a fifth straight month, falling to a new low of -2.33 per cent in March — its lowest at least since the current series was introduced in April 2005 — on cooling oil and manufacturing costs, reflecting trends that could give the RBI room to make further interest rate cuts. The headline inflation was at -2.06 per cent in February. It was 6 per cent in March 2014.
Combined with a moderation in retail inflation to a three-month low of 5.17 per cent in March, the latest drop in the wholesale price index (WPI) brightened the prospects of a rate cut by the Reserve Bank of India (RBI) on or before June 2 when it will meet next to review the monetary policy, said analysts.
While experts said that the inflationary pressures have ebbed out, the impact of the recent damage to crops due to unseasonal rains and hailstorm is yet to be seen in the food inflation. Meanwhile, January inflation has been revised down to -0.95 per cent from -0.39 per cent announced earlier.