Headline inflation eases to 3-year low; raises rate cut hopehttps://indianexpress.com/article/news-archive/web/headline-inflation-eases-to-3year-low-raises-rate-cut-hope/

Headline inflation eases to 3-year low; raises rate cut hope

Headline inflation dipped to its lowest in more than three years at 5.96 per cent in March,raising expectations of a rate cut by the Reserve Bank of India at its annual monetary policy review on May 3

Headline inflation dipped to its lowest in more than three years at 5.96 per cent in March,raising expectations of a rate cut by the Reserve Bank of India at its annual monetary policy review on May 3.

The decline in wholesale price index (WPI) is the lowest since December 2009 when it was 4.95 per cent. It stood at 6.84 per cent in February while it was 7.69 per cent in March during the corresponding 2012 period.

Food inflation,which has 14.34 per cent share in the WPI basket,declined to 8.73 per cent in March from 11.38 per cent in February,on account of a sharp drop in prices of vegetables.

However,onion price rose 94.85 per cent (year-on-year) for the month of March as against 154.33 per cent in February. Planning Commission deputy chairman Montek Singh Ahluwalia said inflationary pressure is coming down gradually. “Inflation behaviour is consistent with what government has been saying that it is slowly coming under control,” he said.

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The data comes at a time when finance minister P Chidambaram is conducting road shows in Canada and the US to woo investors to invest in the country.

A decline in inflation and dismal growth in the industrial production has hardened the expectations of rate cut by the RBI in its annual policy on May 3. The RBI has cut key rates twice in 2013 by 0.25 per cent each to promote growth but cautioned that rate cut in the future would depend on moderation in inflation.

In the manufactured items,there was a marginal decline to 4.07 per cent during the month.

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