Wholesale price-based inflation fell to a 29-month low of 1.34 per cent in March as manufacturing and fuel prices eased, though food articles turned costly.

Inflation based on the wholesale price index (WPI) has fallen for the 10th consecutive month: it was 3.85 per cent in February and 14.63 per cent in March 2022.

“Decline in the rate of inflation in March 2023 is primarily contributed by the fall in prices of basic metals, food products, textiles, non-food articles, minerals, rubber & plastic products, crude petroleum and natural gas and paper and paper products,” the commerce and industry ministry said on Monday.

Headline WPI inflation for March eased to its lowest level since October 2020, when the rate of price rise was 1.31 per cent.

Last month, inflation in food articles rose to 5.48 per cent against 3.81 per cent in February. Among food items, although inflation in vegetables, onion and potato remained negative, the fall was lower in February.

In vegetables, inflation was -2.22 per cent in March against -21.53 per cent in February.

In onion, inflation was -36.83 per cent in March against -40.14 per cent in the previous month.

Inflation in wheat and pulses was 9.16 per cent and 3.03 per cent, respectively, while in oilseeds it was -15.05 per cent in March.

Aditi Nayar, chief economist, Icra said: “While a high base and the downtrend in wholesale prices of most essential commodities in early-April 2023 are likely to soften the YoY food inflation slightly, the possibility of a heatwave in the ongoing month could impart upward pressures on the prices of perishables.”

“Icra expects the headline WPI index to record a deflation after 32 months and print at –0.5 per cent in Apr 2023 on a high base 15.4 per cent in April 2022.”

Madan Sabnavis, chief economist, Bank of Baroda said: “WPI inflation for March was at 1.3 per cent which is the lowest since October 2020. This is in contrast to 14.6 per cent last year. Hence the combination of a high base effect as well as decline in commodity prices contributed to this low inflation number. The indications are that WPI inflation will be in the lower range of 2-3 per cent in the coming months.”

“However, this will not be important from the point of view of credit policy though it may not spell good news for the manufacturing sector in terms of pricing power.”

As per government data, fuel and power basket inflation eased to 8.96 percent in March from 14.82 per cent in February. In manufactured products, inflation was (-)0.77 per cent against 1.94 per cent.