Inflation Rises to 6.95 Percent in February

Bangalore: Inflation rose to 6.95 percent in February because of sharp increase in food prices, especially vegetables and protein-based items. Inflation, as measured by the Wholesale Price Index (WPI), was 6.55 percent in January. In February last year, it was 9.54 percent. As per the official data released, food inflation was 6.07 percent in February against (-)0.52 percent in January. Pulses turned expensive by 7.91 percent and vegetables by 1.52 percent during February. Prices of vegetables had declined by 43.13 percent in January. Besides, egg, meat and fish prices rose 20% during the month, from 18.63 percent in January. Milk became expensive by 11.70%, while rice and cereals turned costlier by 1.53 percent and 1.71 percent respectively. However, prices of potato and onion declined by 2.22 percent and 48.50 percent year-on-year in February. Food articles have 14.3 percent share in the WPI basket. Prices of manufactured items, which have a weight of around 65 percent in the WPI basket, went up by 5.75 percent year-on-year in February, as against 6.49 percent in the previous month. The headline inflation numbers for December was revised upwards to 7.74 percent, from the provisional estimate of 7.47 percent. Inflation in manufactured items has been high since February 2011, when it crossed the 6 percent mark. Among manufactured items, iron grew dearer by 15.82 percent and edible oil prices rose by 7.57 percent, year-on- year. The cost of tobacco products moved up by 10.10 percent and basic metals became 10.44 percent expensive. Inflation in overall primary articles was 6.28 percent in February on annual basis. It was 2.25 percent in January. Non-food primary articles, which include fibres and oilseeds, showed moderation to (-)2.56 percent in February. In January, inflation was 0.55 percent. Inflation in the fuel and power segment was 12.83 percent on an annual basis. The rate of price rise was 14.21% in the previous month. Experts said the rise in inflation, driven by prices of food articles, will keep the pressure on the government to remove supply side bottlenecks. Headline inflation was near double digit for most of 2010 and 2011. The apex bank hiked key policy rates 13 times, totalling 350 basis points between March 2010 and October 2011 to tame inflation. Although RBI has resorted to injecting liquidity of Rs 48,000 crore into the financial system, by reducing Cash Reserve Ratio for banks, it has also called for fiscal steps by the government to combat inflati