Coming it as it does on the heels of retail inflation data for the month that showed stickiness, the latest wholesale price index (WPI) data could provide some comfort to the monetary authorities, although the transmission of easing price pressures from the wholesale to the retail levels remains slow and somewhat erratic.
Retail inflation has remained high in recent months and was above the upper band of the RBI's medium-term target of 4+/2% in both January (6.52%) and February (6.44%), with expectation of some moderation from March onwards.
WPI inflation was at 4.73% in January and at 13.43% in February 2022. WPI inflation for December 2022 was revised upwards to 5.02% from the provisional figure of 4.95%.
Wholesale inflation in food articles registered an uptick at 3.81% in February compared to 2.38% in January.
"The difference in the indices is due to two things: the weights in the indices are different and WPI does not include services while the CPI does," noted Madan Sabnavis, chief economist, Bank of Baroda.
With wholesale inflation cooling more than anticipated by analysts, the probability of easing in retail inflation is now higher.
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