CPI Rises To 8.31% In March 2014

The Consumer Price Index (CPI) for the month of March 2014 was higher by 28 basis points to 8.31 per cent as compared to the previous month of this fiscal year. Provisional figures suggested that inflation in rural area increased while in urban areas it saw some kind of cooling off. The rural area inflation increased by 46 basis points to 8.89% while for the urban area the trend is opposite as the same has seen contraction of 4 basis points to 7.51%.

The food, beverage and tobacco segment has surged by 0.64% in the month of March as compared to the previous month of this fiscal year. In the food beverage segment fruit was the commodity which rose by 3% in the month of March as compared to the month of February. The other commodity which rose during this month was vegetable (up by 1.36%), milk (up by 0.95%), cereal (up by 0.58%) as compared to the previous month of the year 2014.

The fuel & light segment has remained flat, whereas the housing segment has increased by 0.72% during the month of March as compared to the previous month of FY14.

The WPI has also remained high at 5.7% in March 2014 as compared to 4.8% in February 2014. Both the CPI and WPI were due to high inflation in the food sector. The high inflation was due to destruction of kharif crop by the adverse weather mainly due to the hailstorm effect. This suggests that the inflation in the coming months is going to remain at high.

We anticipate the RBI will have close gauge on the market to keep the inflation under control.