New Delhi, April 16: India's annual rate of inflation, based on monthly Wholesale Price Index (WPI), for the month of March, 2012, stood at 6.89% on-year, as compared to 6.95% for the previous month and 9.68% during the corresponding month of the previous year, the data released by Ministry of Commerce & Industry showed Wednesday.
After the 13 policy rate hikes since March 2010, the Reserve Bank of India (RBI) changed its stance last month and eased some liquidity pressure by cutting the CRR by 50 and 75 basis points in a month period. Meanwhile, the industrial growth of the country dropped to 1.1% (revised downward from 6.8%) in January and improved marginally to 4.1% in February.
As RBI is going to announce the monetary policy on Monday, market is expecting 25 bps cut in policy rate.
The inflation in primary article category, with weight-age of 20.12% in WPI, surged 9.62% on-year in March over the same period last year, as compared to 6.28% in last month. It was at 15.89% in same month last fiscal.
Food inflation, after remaining in negative in January, surged to 6.07% in February and continued to move upward to clock 9.94% in March. In the corresponding month last year it was at 16.68%. In January 2011 it was at -0.52%.
Non-Food inflation in March,continued to remain in negative (-1.20) however it surged slightly as compared to last month when it was -2.56%. It was at 0.55% in January 2012. In the corresponding month last year it was at 34.36%.
Fuel and power inflation in the reporting month eased slightly to 10.41% as against 12.83% in February.
Inflation in manufacturing product, with weightage of 64.97% in WPI, eased to 4.87% on-year in March as 5.75% in February.
With signs of liquidity crunch in banking system and related impact on GDP growth rate, the central bank is expected cut the policy rate when it meets on April 17 to announce monetary policy. However, in view of rising fuel price in international market and surge in prices of politically sensitive food items, it would a tough call for the RBI to announce any major cut.