Inflation, based on the annual Wholesale Price Index, rose faster than expected in March to 8.98 per cent on higher prices of vegetables, fuels and manufactured products.
The March reading was well above the Reserve Bank of India's inflation projection of 8 per cent for the last month of fiscal 2010-11, adding pressure on the central bank to tighten its monetary policy. The latest estimate was also sharply higher than the year-on-year increase of 8.31 per cent recorded in February.
JANUARY DATA REVISED
Meanwhile, January's reading was sharply revised up to 9.35 per cent from 8.23 per cent reported earlier, and analysts expect the March reading could eventually be adjusted upwards into double-digits. “More monetary tightening is inevitable after today's data and the case for a 50 basis point hike in May is strengthened,” an analyst said. The RBI's next policy review meeting is scheduled for May 3.
According to the monthly data released by the Ministry of Commerce and Industry on Friday, the food price index rose an annual 9.47 per cent in March, compared with a reading of 10.65 per cent in the previous month, and the fuel price index increased 12.92 per cent annually from 11.49 per cent in February, primarily on account of a coal price hike getting factored in. Manufacturing inflation surged sharply to 6.21 per cent in March, compared with 4.94 per cent recorded in the prior month.
WEEKLY DATA
Weekly inflation data, also released on Friday, shows that food inflation fell to a year's low of 8.28 per cent for the week ended April 2, as certain essential items, like pulses and wheat, showed a declining trend. Food inflation has declined for the third consecutive week. The figure was 9.18 per cent in the preceding week.
The lowest level of food inflation as seen in 2010 was on November 20 when it stood at 8.6 per cent. During the week under review, pulses dipped by 4.76 per cent, and potatoes and wheat were down 2.73 per cent and 1.05 per cent respectively on an annual basis, official data released here show.
However, other food items continued to gain, with fruits up 24 per cent year-on-year, and the eggs, meat and fish subgroup surging 11 per cent. On an annual basis, milk was up 4.05 per cent, cereals were up 3.49 per cent, and rice and wheat surged by 2.2 per cent. Vegetables were up by 5.41 per cent, led by onion, which surged 7.74 per cent on an annual basis.