WPI inflation likely eased to 2.1 pc in March on lower food, fuel prices: Union Bank report

NEW DELHI: Wholesale Price Index (WPI) inflation is expected to ease to 2.1 per cent year-on-year in March 2025, down from 2.4 per cent in February, mainly due to a seasonal decline in food prices, according to a report by Union Bank of India.

The report highlighted that food prices continued to fall during March, especially in the vegetable segment. Vegetable prices dropped 4 per cent month-on-month, though the pace of decline has slowed compared to previous months.

It said, “Wholesale Price Index (WPI) is expected to moderate to 2.1 pc y/y in Mar’25, low from 2.4 pc in the previous month…. Food WPI saw a sustained downtick on seasonal trends. Within food, vegetable prices continued to see sequential drop during the month but at a slower pace”.

However, not all food items followed the same trend. Edible oil prices saw a marginal increase of 1.3 per cent month-on-month, while sugar prices rose by 1 per cent. These increases are expected to slightly push up prices of manufactured food products, as edible oil and sugar are major raw materials used in them.

The report also noted that the fuel WPI is expected to decline in March due to a drop in global crude oil prices. This decline in energy costs has contributed to the overall moderation in WPI inflation. However, not all components are showing a downward trend.

Core WPI, which excludes food and fuel, may see a slight uptick in March. This is largely because global metal prices have spiked due to ongoing tariff wars, which have disrupted trade and raised costs. Despite lower oil prices cushioning some of the impact, the increase in metal prices is likely to push core inflation marginally higher.

Looking ahead, the report warned that global developments, including trade tensions, will need to be closely monitored as they could impact global supply chains and influence future price trends. From April onward, food prices are expected to rise again due to seasonal factors, which may impact inflation going forward.

In summary, while the WPI is expected to cool slightly in March, driven by lower food and fuel prices, risks remain due to global metal price pressures and potential disruptions from trade-related tensions. (ANI)