New Delhi: After touching a three-year low in January, inflation increased marginally to 6.84 percent in February driven by costlier food items and petrol but the rise may not dampen hopes of rate cut by RBI as non-food inflation has moderated.
Inflation based on the Wholesale Price Index (WPI) had declined to three-year low of 6.62 percent in January 2013. However, in February 2012 it was 7.56 percent.
In case of manufactured goods, inflation has moderated to 4.51 percent in February compared to 5.82 percent in the same month previous fiscal making case for easing of the monetary policy by RBI in its mid-quarter review on March 19.
"We believe that the RBI will do a comprehensive and nuanced analysis of the economy and take the right decision and we hope it will vote for growth. I am happy with what he (RBI Governor D Subbarao) has said (yesterday)," Economic Affairs Secretary Arvind Mayaram said.
However, stubborn food inflation is still a matter of concern for government. Food and primary articles have shown higher annual price rise of 11.38 percent and 9.70 percent respectively, led by expensive onion (154.33 percent) and potato (45.99 percent). Besides wheat, vegetables, rice and cereals too became dearer.
Terming food inflation as "worrisome", Mayaram said rise in WPI inflation is largely on account of food inflation and it it is necessary to look at it.
"But if you remove the element of food from the calculation, then actually it has come down," he added.
Prime Minister's Economic Advisory Council Chairman C Rangarajan said RBI will take into account decline in inflation in case of non-food article group in its review.
"Clearly the decline in manufacturing inflation is the critical number that monetary authorities look at. Therefore, there is comfort in that direction," Rangarajan said.
Decline in manufacturing sector inflation gives room to the RBI to bring down interest rates and complement the intention of the Budget to enhance investments, Ficci president Naina Lal Kidwai said.
"This will help uplift sentiments. The green shoots are certainly on the horizon and a concerted push in investment can help bring India back on the growth path," she said.
In his address at London School of Economics yesterday, Subbarao had said that there "has been some very welcome, although much delayed, action on correcting both the CAD and the fiscal deficit over the last six months".
"More notably, the recent budget has firmly embraced fiscal responsibility by restraining the fiscal deficit next year consistent with the road map recommended by the Kelkar Committee," he said.
Meanwhile, retail inflation moved up for the fifth consecutive month to 10.91 percent in February --remaining in the double-digit terrain for third month in a row -- on account of higher prices of vegetables, edible oil, cereals and protein-based items.
As per official data, rate of price rise in case of LPG cylinder during the month was 26.21 percent as against 4.28 percent in the previous month while in case of petrol it was 6.25 percent as compared to 3.77 percent in Janaury.
Inflation in case of diesel was 19.19 percent during the month as against 15.02 percent in the previous month.
Petrol price was raised by Rs 1.50 per litre and diesel by 45 paise a litre effective February 16.
In food category, rice became costlier by 18.84 per cent in February, as against 17.31 percent in the previous month. Inflation rate in milk rose to 4.57 percent while fruits was 8.93 percent.
Rate of price rise in wheat and cereals stood at 21.63 percent and 19.19 percent respectively in February. Inflation rate in egg, meat and fish category stood at 12.85 percent.