Fuel, food push inflation to 6.84 percent in February

New Delhi : India’s wholesale price-based inflation rose to 6.84 percent in February as compared to 6.62 percent in the previous month due to a sharp increase in fuel, food and vegetables prices, the government data showed Thursday.

Onion became costlier by 154.33 percent, potato prices almost doubled and overall vegetables prices increased by 12.11 percent during the month under review year-on-year, according to data released by the ministry of commerce and industry.

There was also a sharp increase in cereals and fuel prices that hit the common people hard.

The country’s main inflation gauge based on Wholesale Price Index (WPI) was 7.56 percent in February last year.

Inflation for December is revised upward at 7.31 percent from 7.18 percent.

Build-up inflation in the financial year so far is 5.71 percent as compared to a build-up of 6.56 percent during the corresponding period of the last financial year.

Cereals became costlier by 19.19 percent. Price of rice surged by 18.84 percent, wheat became costlier by 21.63 percent and pulses became dearer by 14.96 percent.

There was a sharp increase in the prices of diesel and cooking gas as the government allowed the oil marketing firms to hike diesel prices and put a cap on cooking gas supply.

Fuel and power inflation rose to 10.47 percent. Liquefied petroleum gas (LPG) became costlier by 26.21 percent and diesel became costlier by 19.19 percent year-on-year.

“The headline inflation print has inched upwards largely driven by the rise in fuel price index as it accelerated to 10.5 percent. On a positive note, inflation in manufactured products has decelerated further and core inflation has receded to 3.8 percent reflecting the decline in commodity prices as well as weak pricing power,” said Bhupali Gursale, an economist at Angel Broking.

“This should give the RBI some elbow room to ease rates in the March 19 policy as monetary policy stance has turned more growth-supportive. We expect a 25 basis points cut in the repo rate by the RBI in the forthcoming policy review, but rate cuts going forward are likely to be limited by still-prevalent upside risks to inflation and the widening current account deficit,” he said.

High food prices had pushed the consumer price index (CPI) based inflation to 10.91 percent in February as compared to 10.79 percent in the previous month, according to data released by the Central Statistics Office (CSO) earlier this week.