After cooling off for two months, retail inflation inched up once again in February. As food and fuel prices rose during the month under review, consumer price inflation, calculated on the basis of Consumer Price Index (CPI), rose to 5.03 per cent, showed data released by Ministry of Statistics and Programme Implementation on Friday. Retail inflation in January stood at 4.06 per cent.
Inflation in food basket, measured by Consumer Food Price Index (CFPI), increased to 3.87 per cent last month, as compared to 1.96 per cent in January, government data showed. The rise in food prices came despite inflation in vegetable prices falling to 6.27 per cent.
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The fall in vegetable prices was outdone by double-digit increase in other segments - oils and fats got costlier by 20.78 per cent, non-alcoholic beverages by 13.92 per cent, pulses and products by 12.54 per cent, meat and fish by 11.34 per cent and eggs by 11.13 per cent.
Among other segments, prices for spices rose by 8.03 per cent, fruits by 6.28 per cent, prepared meals, snacks, sweets, etc. by 5.28 per cent, and milk and dairy products by 2.59 per cent. Sugar and confectionery and cereals and products heads saw marginal declines of 0.7 per cent and 0.35 per cent, respectively.
Meanwhile, prices in fuel and light segment increased 3.53 per cent. The increase came on the back of incessant rise in transportation fuel and cooking gas prices during February. The rate hike saw petrol prices hit Rs 100 per litre in several cities across the country, while diesel remained above Rs 90 per litre.
LPG prices were also hiked several times in February, taking them to Rs 769 for a 14.2 kg non-subsidised cylinder for domestic use, in Delhi and Mumbai, Rs 795 in Kolkata and RS 785 in Chennai, as on February 25.
With the latest spurt, retail inflation once again moved towards the upper tolerance margin mandated by the Reserve Bank of India (RBI). It, however, is still a ways from crossing this limit. The central bank recommends inflation to be at 4 per cent, allowing an upper and lower tolerance band of 2 per cent each. The RBI closely follows retail inflation to determine its monetary policy.
"There's has been a significant rebound in February inflation figure to 5.03 per cent from 4.06 per cent in January, mostly on the back of rise in food inflation and fuel. The rising global crude prices will continue to add inflationary risks going ahead and CPI will remain elevated. Currently CPI is within RBI's target range but at the April meeting, the central bank will have to tackle with increasing inflation and rising bond yields, as cascading impact may slow India's growth," said Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services.
"The rise in inflation is on account of elevated food, vegetable prices, core inflation at 5.88 per cent is a concern. The rising crude price and its impact on retail fuel prices are a risk to inflation going forward," said Nish Bhatt, Founder and CEO, Millwood Kane International.