Wholesale price-based inflation rose to 9.89 per cent in February from 8.56 per cent in the previous month due to increase in prices of certain food items such as sugar and the hike in excise duty on fuel announced last month.
Sugar prices rose by 55.47 per cent in February year-on-year while potatoes turned costlier by 30 per cent and pulses by 35.58 per cent.
Among fuel items, petrol prices rose by 11.73 per cent and high-speed diesel around 9 per cent.
Overall the fuel index for the month rose by 1.5 per cent. Non-coking coal rose 12 per cent, coking coal 9 per cent and high-speed diesel and petrol by 2 per cent each.
Inflation is expected to rise further following the hike in excise duty on petrol and diesel in the Budget.
To tame inflation, the RBI, in its quarterly monetary review, had asked banks to keep aside more cash with them. It hiked the cash reserve ratio-amount banks have to park with the apex bank-by 75 basis points to 5.75 per cent, which would suck out Rs. 36,000 crore from the system.
The RBI’s projection of inflation touching 8.5 per cent by this fiscal-end has already been breached last month.