Inflation likely to ease to 6.5% by March end: PMEAC

Prime Minister's key economic advisor C Rangarajan today hoped that inflation will come down to 6.5% by end-March and suggested that steps should be taken to release more food stocks to ease price pressure.

The wholesale price index-based (WPI) inflation eased to 6.62% in January, from 7.18% in December, 2012, as per official data released today.

"The decline in inflation is a welcome and reassuring sign. I expect March end inflation to be 6.5%," said Rangarajan, the Prime Minister's Economic Advisory Council (PMEAC) Chairman, adding that January inflation has moderated more than expected.

This is the fourth straight month of decline in the WPI numbers.

Retail inflation, however, remained in double digits at 10.79% in January mainly on account of higher prices of vegetables, edible oil, cereals and protein-based items.

Rangarajan said with the moderation in manufacture or core inflation in January, there was a need to focus on supply side easing of food articles.

"Retail inflation is still high. The WPI inflation in primary and food articles are at higher levels. Efforts should be made to release larger stocks of food articles in the market," Rangarajan said.

Inflation in manufactured items category witnessed a decline and stood at 4.81% in January, from 5.04% in the previous month.

Rangarajan said he expects core inflation to be below 4% by end March.

Inflation in food articles category, which have a 14.3% share in the WPI basket, rose to 11.88% in January, from 11.16% in December.

Prices of onion witnessed a sharp increase by 111.52% during January. The rate of price rise was 69.24% in December, 2012. Vegetables became dearer by 28.45% and potatoes by 79.07% in January as compared to the same period of last year.