Throwing cold water on hopes of a rate cut by the Reserve Bank of India (RBI) on March 15, headline inflation inched up yet again to 6.95 per cent in February on account of rising prices of pulses, vegetables and other protein-rich edibles.
Even as a section of corporates have been looking forward to an easing in interest rates to help spur manufacturing activity, the U-turn in WPI (wholesale price index)-based inflation from 6.55 per cent in January may deny India Inc. that comfort for at least another month although the fresh inflationary bout is mainly owing to food items.
As per the official data, inflation in food articles surged to 6.07 per cent in February year-on-year from its negative zone stay at (-) 0.52 per cent in January.
However, inflation showed a declining trend in manufactured items to provide some relief. With a weight of nearly 65 per cent in the WPI, manufacturing sector inflation decelerated to 5.75 per cent year-on-year in February from 6.49 per cent in the previous month.
Finance Minister Pranab Mukherjee sought to derive comfort from the downward trend in manufacturing sector inflation and hoped that headline inflation would settle at about 6.5 per cent by the end of this fiscal. “Food inflation, particularly, has gone from negative to 6 per cent plus ... [in] primary food articles [inflation] there has been sharp increase … I do hope if this trend [in manufacturing inflation] continues, then we will end the year with around 6.5 per cent [inflation] ...,” he said.
“I don't think that RBI would take further action in the [mid-quarter] policy review,” State Bank of India Chairman Pratip Chaudhuri said.