New Delhi: Giving a slight relief to the consumers, the overall inflation in March eased to 6.89 percent on account of sharp decline in prices of onions, fruits and protein-based items, although the prices of vegetables and pulses soared higher.
    
Inflation, as measured by the Wholesale Price Index (WPI), was 6.95 percent in February. In March last year, it was 9.68 percent.
    
As per the official data released on Monday, inflation in food items was 9.94 percent in March, as against 6.07 percent in February. Onion prices declined by (-)24.23 percent in March. The rate of decline was (-)48.50 percent in February.
    
Besides, eggs, meat and fish prices rose 17.71 percent during the month, lower from 20 percent in February. Pulses turned expensive by 10.05 percent and vegetables by 30.57 percent during March. In February, the rate of price rise in vegetables was 1.52 percent.
    
Milk became expensive by 15.29 percent, while rice and cereals turned costlier by 4.73 percent and 4.41 percent respectively. Prices of potato too rose by 11.60 percent. Food articles have 14.3 percent share in the WPI basket.    

The manufactured goods showed moderation in inflation to 4.87 percent, from 5.75 percent. This may have a bearing on the annual monetary policy to be announced by the Reserve bank on Tuesday.
    
The inflation number for March remained marginally above the projections made by Finance Ministry, which had expected it to be around 6.5 percent. The headline inflation number for January was revised upwards to 6.89 percent, up from the provisional estimate of 6.55 percent.

Inflation, as measured by the Wholesale Price Index (WPI), remained high for most part of 2011, and RBI had hiked interest rates 13 times to tame the price rise.

Reserve Bank of India on price rise

Making more money available for lending, the central bank has already cut the CRR, the portion of deposits banks have to keep with the Reserve Bank, by 125 basis points since late January to 4.75 percent.
    
The challenge before RBI is to arrest the decline in growth, which slipped to three-year low of 6.9 percent in 2011-12. The government expects the GDP growth to accelerate to 7.6 percent in 2012-13, although the Asian Development bank (ADB) has pegged it at 7 percent.
    
As per the data, inflation in overall primary articles rose sharply to 9.62 percent in March, from 6.28 percent in February.
    
During the month, milk became expensive by 15.29 percent, while rice and cereals turned costlier by 4.73 percent and 4.41 percent respectively. Prices of potato too rose by 11.60 percent.
    
Prices of eggs, meat and fish prices rose 17.71 percent. The rate of price rise was lower than 20 percent in February. Besides, onion prices declined by (-)24.23 percent in March. The rate of decline was (-)48.50 percent in February.
    
The headline inflation number for January was revised upwards to 6.89 percent, up from the provisional estimate of 6.55 percent.
    
In manufactured items, inflation has been high since February 2011, when it crossed the 6 percent mark. Year-on-year, among manufactured items, iron grew dearer by 17.18 percent and edible oil prices rose by 9.78 percent. Inflation in tobacco products and basic metals was 8.22 per cent and 9.51 percent respectively.

Prices of non-food primary articles, which include fibres and oilseeds, were lower at (-)1.20 percent in March. In February, their rate of price rise was (-) 2.56 percent.
    
Inflation in the fuel and power segment was 10.41 percent on an annual basis. It was 12.83 percent in February. Experts said the inflationary pressure, driven by prices of food articles, will keep the pressure on the government to remove supply side bottlenecks.
    
"Food prices have become a big challenge for the central bank as well. (Still) RBI may cut both key interest rates (repo and CRR) by 25 basis points (0.25 percent) in its annual credit policy on Tuesday," Bank of Baroda Chief Economist Rupa Rege-Nitsure said.

(JPN/Agencies)