Headline Inflation eases into comfort zone!

WPI inflation for 12-month ended March 2013 came in at a surprising 5.96%, down from previous month’s 6.84%, tracking a broad-based moderation in inflation of the sub-indices, particularly primary food products (to 8.7% from 11.4%) and manufactured products (to 4.1% from 4.5%). The non-food manufactured goods inflation (Core Inflation) which the central bank uses to gauge demand-driven price pressures, further slowed to 3.5% in March from 3.8% in February. Fuel prices also eased to 10.2% in March from 10.5% in February. Food prices for consumers rose 12.42% on year in March, slower than an annual rise of 13.73% in February.

Consumer Price Index (CPI) inflation number slowed to 10.39% for 12-month period ended in March 2013 from 10.91%.

 Index for industrial production (IIP) growth posted a positive 0.6% growth in February following January’s growth rate of 2.4%. Manufacturing sector grew 2.2% in February, slightly below 2.7% in January. Capital goods production rose 9.5% after a 1.7% contraction in January.               

Sharp fall in global commodity prices, a resultant easing in headline and core inflation numbers as well as a gradual recovery in domestic growth is raising hopes of interest rate easing in the Indian economy.

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