WPI Inflation eases to 8.66% in April :: Angel Broking,

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WPI Inflation eases to 8.66% in April
The wholesale price-based inflation for April 2011 cooled off a bit to 8.66% from an
upwardly revised 9.04% for March 2011. The headline inflation number was slightly above
the median (8.52%) of Bloomberg’s survey of economists. While primary articles inflation
continued to witness moderation for the third straight month, fuel and power inflation rose
to the highest in the last nine months at 13.3%. Manufactured products inflation also eased
off slightly to 6.2% from 6.5% in March 2011. Primary and manufactured articles inflation
spread narrowed further to 5.9% from as high as 13.1% in January 2011, indicating
greater pass-through of higher raw-material costs and commodity prices to consumers.
The recent steep hike (`5/litre) in petrol prices is expected to further push up fuel inflation
for May, thereby putting pressure on the overall inflation level as well. The Reserve Bank of
India expects headline inflation to stay in the range of 9% during 1HFY2012 and ease off
thereafter to ~6% by the end of FY2012. Taking into account the much better-thanexpected
reading of IIP (7.3%) for March 2011 coupled with continued inflationary
pressures (especially from energy prices), we expect the Central Bank to continue with its
tight monetary stance for a while longer.