India's wholesale inflation slows to four-month low in March

NEW DELHI (Reuters) -India's wholesale inflation eased to a four-month low in March as food prices rose at a slower pace, according to government data released on Tuesday.

Wholesale inflation, a proxy for producer prices, fell to 2.05% year-on-year from 2.38% in February, and was lower than the 2.5% projected by economists in a Reuters poll.

Wholesale food prices rose slowly at 4.66% in March against 5.94% in February. Vegetable prices fell 15.88%, compared to a 5.80% drop in the prior month.

Food prices in the wholesale markets have eased in recent months as vegetable output improved.

Last week, the Reserve Bank of India (RBI) cut its key repo rate for a second consecutive time this year, while also lowering India's growth forecast for the current year to 6.5%.

The RBI, however, warned that lingering global market uncertainties and the recurrence of adverse weather-related supply disruptions pose upside risks to the inflation trajectory.

India's weather office is set to forecast this year's monsoon later on Tuesday, followed by March retail inflation data at 1600 IST.

Cereal prices in the wholesale markets rose 5.49% in March, against a 6.77% rise a month earlier, the data showed.

Prices of manufactured products, which account for about 64% of the wholesale price index, increased 3.07% after rising 2.86% rise in February.

Meanwhile, fuel and power prices rose 0.20% year-on-year, compared with a 0.71% drop in the previous month.

(Reporting by Sarita Chaganti Singh; Editing by Mrigank Dhaniwala and Eileen Soreng)

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