Surging food and fuel prices pushed wholesale prices higher in February but it still remained below the Reserve Bank of India’s comfort level, sustaining hopes of an interest rate cut when the central bank reviews monetary policy in April.
Inflation, measured by the wholesale price index, rose an annual 2.9% in February, marginally higher than previous month’s 2.8%. WPI inflation was 2.7% in the same month last year.
But rising food prices posed some worries. Food prices rose 4.3% in February, faster than the previous month’s 2.3%. Prices of wheat and pulses hit double digits during the month, while vegetable prices rose nearly 7% in Feb, with potato prices rising 23.4% during the month.
Economists said inflation in food items was inching up and finding its reflection at the retail level. They said though prices of vegetables and pulses at the retail level are still displaying deflation, they will also start witnessing higher inflation soon.
Data released earlier this week showed retail inflation rose to a four month high of 2.6% in February but remained below the RBI’s comfort zone, which led to hopes for a rate cut in April.