Inflation rises to 6.95 percent in February

Reversing a four-month old declining trend, India’s inflation rose to 6.95 percent in February on a sharp increase in prices of food articles, government data released Wednesday showed.

The monthly inflation based on wholesale price index was 6.55 percent in January. The headline inflation has risen for the first time in five months.

Food inflation accelerated to 6.07 percent in February after remaining negative or near zero for the last two-three months.

Food inflation was at 0.79 percent in December 2011 and (-) 0.52 percent in January.

The build up inflation in the financial year so far was 5.95 percent compared to a build up of 8.66 percent in the corresponding period of the previous year, according to the ministry of commerce and industry data.

The headline inflation was recorded at 9.54 percent in February 2011.

Reacting on the monthly data, Finance Minister Pranab Mukherjee said the increase showed that inflationary pressure continued in the economy.

However, he expressed hope that inflation would come down to 6.5 percent by March-end. The March inflation figure will be available in April.

“I do hope if this trend continues then we will end the year with around 6.5 per cent,” Mukherjee told reporters here.

The rise in inflationary pressure has made it difficult for the Reserve Bank of India (RBI) to cut rates in its monetary policy review Thursday.

“At a time when industry is already reeling under the impact of an investment led slowdown caused by tightening monetary policy of the RBI and with manufacturing sector growing at a modest 4.4 percent during April-January 2011-12, the upturn in inflation spells bad news for industry,” said Chandrajit Banerjee, director general, Confederation of Indian Industry (CII).

Inflation in manufactured products rose to 5.75 percent in February while in overall primary articles segment it grew to 6.28 percent.