India’s wholesale inflation rebounded last month from the 10-month low it hit in January

• The latest inflation data released by the Indian government today showed an uptick in the wholesale inflation rate to 2.93%
  
• In January 2019, WPI inflation crashed to a 10-month low of 2.76% owing to subdued fuel prices.
  
• Concurrently, retail inflation rose to 2.57% in February after falling to a 19-month low of 1.97% the previous month.
  

The latest inflation data released by the Indian government today showed an uptick in the wholesale inflation rate from 2.93% as fuel and electricity prices as well as the cost of household items like vegetables and dairy products increased.

In January 2019, WPI inflation crashed to a 10-month low of 2.76% owing to subdued fuel prices.


Concurrently, retail inflation rose to 2.57% in February after falling to a 19-month low of 1.97% the previous month. The data showed that the persistent decline in price growth has bottomed out due to a rebound in food and petrol prices.

If the inflation rate rises again this month, it could lower the possibility of a rate cut by the Reserve Bank of India at its next monetary policy meeting in April.

The RBI, which mainly factors in core inflation when determining rates, had cut the repo rate by 25 basis points to 6.25% last month.

However, despite the recent uptick, inflation is expected to stay below the RBI’s medium-term target for the rest of the year.

Tanvi Jain, of UBS Securities, told Reuters that headline core price inflation will be under 4% - the lower bound of the RBI’s target range - until October 2019 with an overall average of 3.8% for fiscal 2020.


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