India’s wholesale price index-based inflation flared up to two-and-a-half years high of 6.55% in February from 5.25% in January mainly due to a spurt in mineral and fuel prices while food prices started rising following rapid remonetisation.
The spurt in WPI inflation adds to the worries of a pent up demand after demonetisation which may prompt Reserve Bank of India to keep policy interest rates unchanged for some more months.
The WPI inflation printed higher than analysts’ expectation of 5.9% as polled by Reuters and was much higher than 0.85% decline in the same month last year.
The February WPI inflation was steepest since August 2013 when it printed at 6.99%.
Government data showed on Tuesday the food inflation firmed up to 2.69% in February from a 0.56% fall in January.
Mineral prices were up 31% while fuels were costlier by 21% as petrol and diesel prices were revised up.
The primary articles index up 5% while the fuels index rose 21% and manufactured products index 3.66% in February.
In the February monetary policy review, the RBI paused on rates as it expects inflation to firm up due to the rapid pace of remonetisation.
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