India’s headline inflation based on the wholesale price index (WPI) unexpectedly accelerated to 8.98% in March from 8.31% a month ago mainly due to rise in prices of manufactured items.
While food inflation declined to 9.47% in March from 10.65% a month ago, inflation of manufactured items and fuel group rose to 6.21% and 12.92% respectively from 4.91% and 11.49% in February.
Last month RBI had estimated the inflation to come to about 8 % in March. The sharp rise will spark the need for more interest rate hikes.
“In the absence of a strong supply response, increasing demand will inevitably lead to higher prices,” Reserve Bank Deputy Governor Subir Gokarn said April 5. He said a “monetary response is warranted” should demand exceed supply and stoke inflation.
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