Inflation up to 6.84% in February

Inflation for the month of February rose to 6.84% on the back of costlier essential food items including rice, wheat, onions and fruits indicating that the supply side constraints continue in the market leading to high prices of essential commodities.

The spike in inflation came in after a decline in the past four consecutive months. In January inflation was marginally lower at 6.62 per cent.

The spike inflation is outside the “comfort zone of the Reserve Bank of India” which is between 5-6% for it to contemplate a further rate cut in the mid-term policy review which is slated for March 19.

Inflation based on the Wholesale Price Index (WPI) stood at 6.62% in January. In February 2012 it was 7.56 per cent.

Meanwhile, industry chambers feel there are signs of some degree of stability but say that the Government will need to work on structural changes, subsidies and also rein in fiscal and current account deficit.

“Going forward, however, we need work on required structural changes. The deregulation of diesel prices is likely to further exert an upward pressure in the near term, albeit removal of the subsidies continues to be important. With changing food habits of the populace, we need to gear up to bring down the existing bottlenecks assuring smooth supply of food and goods. This will be imperative for controlling food prices,” FICCI chief N L Kidwai said.

Meanwhile as per official data released on Thursday the rate of price rise in the manufactured items category witnessed a slight decline at 4.51% last month. Overall inflation rate in food articles category which has a 14.34% share in the WPI basket  too witnessed a decline at 11.38 per cent. Inflation in the food articles category was at 11.88% in January. Onions were costlier by 154.33% for February as against the inflation rate of 111.52 per cent in January.