Mar 14, 2016 11:24 AM IST | Source: Moneycontrol.com

Feb CPI, WPI seen easing off a bit aided by food

The CPI has risen for the past 6 months from 3.7 percent to a 17-month high of 5.7 percent in January 2016. However, it is likely to decline in February led by food inflation mainly on easing seen in vegetable prices such as onions.

The Consumer Price Index (CPI) for February is expected to ease off a bit month-on-month to 5.53 percent from 5.69 percent, as per estimations of a CNBC-TV18 poll. The poll hints at a contraction in the Wholesale Price Index (WPI) as well to -0.3 percent, compared to -0.9 in January.

The CPI has risen for the past 6 months from 3.7 percent to a 17-month high of 5.7 percent in January 2016. However, it is likely to decline in February led by food inflation mainly on easing seen in vegetable prices such as onions. Food inflation had touched an 11-month high of 6.8 percent in January.

If the WPI does indeed drop, as estimated, then it will be the 16th consecutive month of a decline.  

The worry is hardening of cereal prices MoM in the wholesale market, which could result in subsequent hardening in food inflation. In January cereals inflation declined to 1.24 percent MoM from 1.63 percent.

Overall slump in international commodity prices has led to deflation in WPI. For example IMF's commodity price index has averaged 6 percent lower on year-on-year (YoY) basis and was down 6.5 percent in February. Fuel inflation in January was at -9.21 percent versus -9.15 percent MoM.

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