Revision in wholesale inflation may worry Reserve Bank

But March-end inflation could be within central bank's projection

The wholesale price index (WPI) inflation might be cooling, but the real picture is not so optimistic. The January WPI inflation was revised up by 69 basis points (bps) on Monday from 6.62 per cent to 7.31 per cent and, according to economists, the February and March data, too, might be revised.

Data released on Monday showed the WPI inflation, India's key inflation measure, cooled to 5.96 per cent in March after an annual uptick to 6.84 per cent in February.

"January WPI inflation was revised up sharply to 7.31 per cent year-on-year (y-o-y) from 6.62 per cent earlier on an upward revision in the administered fuel prices (LPG and diesel, adding 40 bps) and primary articles (adding 23 bps). While the administered fuel price increase is already incorporated in the February WPI, there could be an upward revision in the primary index and hence the overall February WPI inflation could also be revised up slightly, in our view," said Nomura economists Sonal Varma, Aman Mohunta and Vivek Rajpal in a report on Tuesday.

The March WPI figure is below the Reserve Bank of India's (RBI) projection. In the third-quarter review of the monetary policy held on January 29, RBI had said, "Keeping in view the expected moderation in non-food manufactured products, inflation, domestic supply-demand balances and global trends in commodity prices, we revised downwards the baseline WPI inflation projection for March 2013 from 7.5 per cent to 6.8 per cent."

  Not just February, but even the March numbers will be revised. "WPI for February and March will also be revised but the quantum of revision will be much lower. The revision will be mainly due to primary articles and also a little bit due to the manufacturing items," said Saugata Bhattacharya, chief economist, Axis Bank.

Despite the revision, the March WPI will be below RBI's projection.

"There may be revision in the February as well as March numbers to the extent of 20 bps. The revision will be on account of oil seeds prices," said Indranil Sen Gupta, India economist, Bank of America Merrill Lynch.