March CPI inflation seen in 5.08-5.6% range

The consumer price index (CPI) data for the month of March that will be released later today is estimated to possibly harden a little to 5.36 percent versus 5.37 percent.

The CPI data could come anywhere between the range of 5.08 to 5.6 percent due to the impact of food inflation that could be seen this time. A group of economists believe that the food inflation might not be high this time because of the unseasonal rains as there isn’t much of an impact and secondly, it could be a lead impact. Hence, it could be more evident in the coming months as opposed to the month of March.

The other group of economists expects a hardening on a M-o-M basis in terms of CPI. Firstly, because they do expect the food inflation to possibly harden on a M-o-M basis because of the unseasonal rain impact. They expect it to harden to levels of around 6.9 percent versus 6.79 percent on a M-o-M basis and to be led by pulses, which saw around 1 percent increase on a M-o-M basis. This combined with transport and communication, which includes fuel prices will result in a possible hardening in the M-o-M inflation.

So overall the range is anywhere between 5.08 percent and 5.6 percent and there will be a marginal base impact also this time. The CPI in March 2014 was 8.25 percent.