Wholesale Inflation Expectedly Dipped To 3.9% In Feb; Likely To Ease Further In March On A High Base: ICRA

Core inflation eased for the tenth consecutive month in February 2023.
<div class="paragraphs"><p>Pulses in bags in a wholesale market. (Source: freepik)</p></div>
Pulses in bags in a wholesale market. (Source: freepik)

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ICRA Research Report

As expected, the Wholesale Price Index inflation witnessed a broad-based moderation to 3.9% in YoY terms in February 2023 (our expectation: up 4.0%) from 4.7% in January 2023. Subsequently, there has been a sequential softening in global commodity prices in the ongoing month, which along a high base for the core index (March 2022: up 11.3%) related to the escalation of the Russia-Ukraine conflict, and the resultant surge in commodity prices, are likely to further soften the core-WPI inflation in March 2023.

Moreover, the U.S. dollar/Indian rupee pair has mildly appreciated in sequential terms in March 2023 so far on the back of foreign portfolio investment-equity inflows, as well as weaker DXY, which would ease the landed cost of imported goods, relative to the prior month.

Amid a mixed trend in the wholesale prices of essential commodities in the early part of the month, the WPI inflation is anticipated to soften to ~2% in March 2023.

Thereafter, it could slip into deflation during some months of Q1 FY24 on the high base related to the surge in global commodity prices in the year-ago period, even as the outlook for food inflation over the next few quarters is clouded by emerging risks such as a potential heatwave and the development of El Nino conditions.

Click on the attachment to read the full report:

ICRA WPI February 2023.pdf
CPI Inflation Cools Marginally in February, Stays Over 6% For Second Straight Month: CareEdge


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