New Delhi, April 17: The Wholesale Price Index (WPI)-based annual inflation rate in March eased to 5.7%, against a three-year high of 6.55% in February, according to data released on Monday.
This was attributed to a fall in the prices of pulses, potato, and onion. Further, a pick up in the circulation of new currency has helped revive consumer demand after demonetisation.
The government data showed on Monday that mineral prices fell to 24% in March from a rise of 31% in February, while fuels became cheaper by 18% with diesel prices revised downwards. The unfavourable base affect is being cited as the major reason for the fall in the mineral and fuel prices.
Five of the six major categories have shown fall in the WPI index, except for food articles, which firmed up to 3% in March from 2.7 % in February. The increase in food prices was primarily due to higher prices of fruits, vegetables and rice. Vegetable prices have shown a sharp increase of 6% in March from negative 8% last month, while fruits and rice have shown marginal increase.
In case of manufactured products, the index declined to 3% from 3.7% in February. Non-food articles have also shown a decline.
The government has also revised its January WPI inflation to 5.53% from 5.25%.
The Reserve Bank of India (RBI), in its monetary policy review on 6 April, said headline CPI inflation is set to undershoot the target of 5% for the March quarter in view of the sub-4% readings for January and February. For 2017-18, RBI projected inflation to average 4.5% in the first half of the year and 5% in the second half of the financial year.