March inflation rises to four-month high of 5.52% due to food, core prices

By Administrator_ India

Capital Sands

The retail price inflation rate rose to a four-month high of 5.52 percent in March due to upward movement in core as well as food rates, barring vegetables and cereals. This may prevent the central bank’s monetary policy committee (MPC) from cutting the policy rates unless growth really takes a hit due to regional lockdowns in 2021-22, experts say.

The consumer price index (CPI)-based inflation rate had stood at 5.03 percent in February 2021 and 5.84 percent in March 2020.

The average inflation rate in 2020-21 rose to 6.18 percent compared to 4.76 percent in the previous year. The average inflation rate could fall to around five percent in the current financial year, according to MPC estimates.

While the food inflation rate rose to 4.94 percent in March from 3.87 percent in the previous months, prices of veggies and cereals declined. While prices of vegetables fell by 4.83 percent in March compared to 6.27 percent in the previous month, those of cereals moved down by 0.69 percent from 0.35 percent.

Fruits saw the inflation rate rising to 7.86 percent in March from 6.28 percent in the previous month.

On the other hand, the inflation rate in nov-vegetarian items remained elevated even as it declined in eggs. Meat and fish saw the rate rising to 15.09 percent in March from 11.34 percent in the previous month. On the other hand, eggs saw the rate declining to 10.60 percent from 11.13 percent.

Prices of sugar continued to see a fall, while the inflation rate in spices declined.

Aditi Nayar, principal economist, Icra, said, “Despite a month-on-month drop in food prices, driven by vegetables, egg, spices, cereals and sugar, inflation for food and beverages hardened in March due to the base effect. A reversal of the base effect and the decline in prices of vegetables such as onions are expected to dampen food inflation to 2-2.5 percent in April.”

The fuel and the light inflation rate were up at 4.5 per cent from 3.53 per cent. It is difficult to gauge the inflation rate in petrol and diesel because indices for March 2020 aren’t available. However, it seems they rose in March 2021 from February 2021. Inflation rate in petrol had risen to 20.67 per cent in February from 12.53 per cent the previous month and in diesel to 22.57 per cent from 12.79 percent. In March, the index for petrol rose to 129.3 points compared to 126.1 points in February and in deisel to 179.2 points from 173.8 points.

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