Both the inflation numbers based on the Consumer Price Index (CPI) as also the Wholesale Price Index (WPI) moved in an upward directly in February as against the previous month. The WPI index jumped to a 39 month high to 6.55 per cent in February which was 5.25 per cent in January 2017.
This otherwise justifies the RBI’s move of not changing the REPO rate during last monetary committee meeting. RBI is cautious on the loose monetary position under the expected rise of interest rates in US in the coming days. The inflation numbers related to food and fuel items were high, though the manufacturing sectors showed a decline in the inflation rate, which is expected to narrow the gap between WPI and CPI.
Out of the two the WPI based inflation raised sharply during February when compared to the CPI based inflation. The reason for this is that commodities like Crude oil and coal, do not form part of WPI. Protection to the minerals sub index revision more so for crude oil has resulted in a steep increase in the WPI based inflation, it is said.