High prices of vegetables and manufactured items drove the headline inflation in March to 8.98%, way above the RBI’s expectation of 8%. The overall inflation measured on the basis of Wholesale Price Index was 8.31% in February.

The rise in overall inflation for the second month in a row may prompt the central bank to go for another round of policy rate hikes in its policy review meeting, scheduled for May 3.

As per the official data released, the high inflation was on account of rising prices of manufactured items, milk, vegetables and fruits. In addition, high fuel costs due to spiraling international crude oil prices also contributed to the phenomenon.

Besides, food inflation, which accounts for nearly 15% of overall WPI inflation, stood at 8.28% for the week ended April 2.

According to the official data released, prices of primary articles food, non food articles and minerals shot up by 12.96% on an annual basis.

During the month, fuel and power prices went up by 12.92%, driven mainly by a 23.14% rise in petrol prices and a 14.99% jump in cooking gas rates.

At the same time, the manufactured goods group index rose 6.21% on an annual basis. Manufactured items have the highest weight of 64.9% in the WPI.

(Sourced from BL)