An uptick in items such as wheat, potatoes, onions and fruits, forced food inflation to snap a three-week downward trend to inch up back into the double digits.
West Asia fears
Fuel inflation, though steady, continued to stay at elevated levels amid fears that the continuing unrest in the Arab world could stoke price trends in coming months, keeping up the pressure on the central bank to rein in broader inflation.
Data released on Thursday showed that the food price inflation, based on the annual Wholesale Price Index, rose 10.05 per cent in the week ended March 12, higher than the 9.42 per cent annual rise recorded in the previous week.
While analysts termed the upsurge in food inflation as a one-off move that should ease going ahead, the unrest in West Asia and North Africa has aggravated fears of costlier fuel stoking overall inflation, even though a revision in fuel prices is unlikely before the upcoming State elections.
The data released on Thursday showed that the fuel price index surged 12.79 per cent in the latest week, the same level as reported in the previous week.
The markets seem to have discounted the uptick in the weekly inflation number, with bourses rising for the third consecutive day on Thursday. Reacting to the latest inflation estimates, the Finance Minister, Mr Pranab Mukherjee, said it would be possible to maintain inflation at “reasonable” levels on account of measures taken by the Government.
While replying to the debate on the Finance Bill in the Rajya Sabha, he also said the Centre and the States have to work collectively to remove supply bottlenecks in order to tame inflation.
According to the data, onions were up 11 per cent on an annual basis, while fruits surged 24 per cent and milk was up 7 per cent. Cereals surged over 4 per cent, with wheat moving up sharply.
Inflation among non-food articles, led by fibres, was up 27 per cent year-on-year. On a sequential basis, poultry chicken, and fruits and vegetables surged 2 per cent.
Headline inflation had quickened to 8.31 per cent in February from 8.23 per cent a month ago on rising fuel and manufacturing prices.
The RBI, on its part, had raised interest rates last week for the eighth time since last March and is likely to maintain its anti-inflationary bias. The central bank, in its quarterly review on March 17, had raised its forecast for headline inflation at the end of March to eight per cent, from an earlier seven per cent, citing risks stemming from high global crude prices.