While the wholesale price index based inflation rose marginally to 8.31% in February, from 8.23% in the previous month, finance minister Pranab Mukherjee has expressed hope that inflation would come down to around 7-7.5% by end-March
New Delhi: India's headline inflation rose marginally to 8.31% for the month ended February, driven by high food and fuel prices, which may prompt the Reserve Bank of India (RBI) to hike interest rates when it reviews the monetary policy later this week, reports PTI.
However, finance minister Pranab Mukherjee expressed hope that inflation should come down to 7% by the month-end.
"By March-end, it would be possible to have around 7%-7.5% (inflation)," Mr Mukherjee told reporters in the Parliament House complex.
Monthly fluctuations in inflation do not give a correct picture, he added.
The inflation rate stood at 8.23% in January this year, whereas it was 9.42% in February last year.
The rise in inflation was mainly on account of higher milk, edible oil, vegetables and fruit prices. In addition, high fuel prices on account of soaring international crude oil rates also contributed to the inflation.
Hit by the tsunami in Japan, crude oil prices have eased to $99 per barrel on expectations of lower demand. This will also result in cooling of commodity prices globally.
During February, food inflation, which accounts for over 14% of overall wholesale price index (WPI) inflation, stood at 10.65% on year-on-year basis.
As per the WPI data, the prices of primary articles-food, non-food articles and minerals-shot up by 14.79% on an annual basis, official data showed. However, prices of certain food items declined on a year-on-year basis.
While wheat became cheaper by 1.67%, pulses prices fell by 5.10% and rates for potatoes by 11.28%.
On a monthly basis, prices of jowar rose by 9%, arhar by 7%, barley 4%, mutton by 3%, and wheat by 2%, while milk, maize and poultry chicken became 1% more expensive.
However, fruits and vegetables became cheaper by as much as 20%, while spices dropped by 4%, eggs by 2% and rice by 1%.
With inflation showing no signs of moderation, it is widely expected that the RBI may raise key policy rates by 25 basis points at its monetary policy review on 17th March.
The RBI may raise key policy rates by 25 basis points to prevent food inflation from spilling over to the manufacturing sector, Crisil chief economist DK Joshi said.
During the month, fuel and power prices went up by 11.19%, driven mainly by a 28.73% rise in petrol prices and a 14.99% jump in cooking gas (LPG) rates on an annual basis.
On a monthly basis, prices of aviation turbine fuel rose by 7% and furnace oil and petrol by 3% each, while naphtha became 2% more costly.
At the same time, the manufactured goods group index rose by 4.49% on an annual basis. Manufactured items have the highest weight of 64.9% in the WPI.
Edible oil prices hardened by 11.44% on an annual basis, basic metal and metal products by 8.61% and iron and steel by 9.53%, while cement prices remained almost stagnant.
On a month-on-month basis, prices of soyabean oil moved up by 8% and wheat flour (atta) by 5%, while vanaspati, powder milk and mustard oil prices rose by 3 % each.
However, the prices of tea leaf (blended) eased by 14%, groundnut oil by 3% and ice cream and sugar by 2% each.
Meanwhile, the WPI numbers were revised upward to 9.41% for the month of December, compared to a provisional 8.43% announced earlier.
ICRA economist Aditi Nayar, too, said the RBI may go for a hike in interest rates.
"We continue to expect that the RBI may increase repo and reverse repo rates by 25 basis points in the upcoming mid-quarter policy review," she said.
SBI Mutual Fund has announced the dividend as Rs4 per unit
SBI Magnum Tax Gain Scheme has announced dividend for 2011. The record date for the dividend is 18 March 2011. SBI Mutual Fund has announced the dividend as Rs4 per unit.
SBI Magnum Tax Gain scheme provides tax benefit under section 80C (the one with Rs1 lakh limit), and primarily invests in equity.
Taurus Mutual Fund new issue closes on 17th March
Taurus Mutual Fund has launched Taurus Fixed Maturity Plan Series D (370 Days), a close-ended income scheme.
The investment objective of the scheme is to generate income with minimum volatility through investments in a portfolio of debt and money market instruments maturing on or before the maturity of the scheme.
The new issue closes on 17th March. The minimum investment amount is Rs5,000.
CRISIL Short Term Bond Fund Index is the benchmark index. Rahul Pal and Pankaj Jain are the fund managers.