Feb WPI inflation at 6.84%, higher than estimates

New Delhi: India’s wholesale price index (WPI) rose a faster-than-expected 6.84 percent in February, clouding the policy outlook ahead of the RBI meeting next week.

Analysts polled by Reuters had expected wholesale prices, the main inflation gauge, to rise an annual 6.54 percent, slower than an annual rise of 6.62 percent in January.

[caption id=“attachment_660720” align=“alignleft” width=“380”] The reading for December was revised up to 7.31 percent from 7.18 percent. AFP[/caption]

The reading for December was revised up to 7.31 percent from 7.18 percent, government data also showed on Thursday.

Core inflation, which excludes volatile food and fuel prices, has been easing since September 2012 and the trend probably continued last month, helped by a favourable statistical base from a year ago.

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The headline inflation rate, which averaged around 9 percent since 2010, began easing last October and has since averaged just over 7 percent.

“If inflation remains sticky at 6 percent levels, the room to cut will be limited. We don’t see rates coming off sharply,” said Yuvika Oberoi, economist at Yes Bank, who expects inflation to remain at those levels through the year.

The markets however edged up on rate cut hopes. The BSE index was up 0.44 percent while the 50-share NSE index gains 0.45 percent, as February core inflation at 3.8 percent gives enough headroom for rate cut by the RBI in its policy review on March 19, dealers said.

Reuters