WPI inflation seen softening to 4.9% for Feb: Poll

After easing retail inflation, expectations are that wholesale inflation too could soften further from 8 month lows touched to January to below 5 percent. A CNBC-TV18 poll of economist has pegged the figure at 4.9 percent versus 5.05 percent (MoM). The range is all the way from 4.8-5.0 percent. The WPI inflation is likely to ease on food inflation pulling down the entire headline index. The food inflation in the previous month for WPI fell to 8.8 percent versus 13.68 percent—an eight-month low. Remember, the CPI inflation for February 2014 also indicated that the food inflation dipped to 8.5 percent versus 9.9 percent indicating that the WPI inflation will see the same impact.

Also Read: Analysts see Rajan not easing rates despite better CPI dataThe key thing to watch out for again will be manufacturing inflation because there is an expectation that may be manufacturing inflation could rise to around 2.9 percent, in the previous month it rose 0.5 percent to 2.76 percent. Now, this would be resultant in core WPI inflation. The core WPI inflation has been hardening. For example, it came in at 3 percent in the previous month it was up 20 bps on a month on month basis. So core inflation again would be the key factor to watch out for but going by what happened with CPI there is an expectation that core WPI will soften as well but WPI is not looked at as closely as CPI anymore.