WPI inflation likely to be 8% in March

Wholesale Price Index inflation is likely to be around 8 per cent in March on account of rising global crude prices, much above the government estimate of 7 per cent, said research firm Dun & Bradstreet.

The research firm "expects the WPI inflation to be around 7.9 per cent-8.1 per cent during March".

Overall inflation rose marginally to 8.31 per cent in February, 2011, from 8.23 per cent in the previous month.

The government expects it to fall to 7 per cent by March-end.

Food inflation has been declining for the past few weeks on account of a fall in prices of vegetables and fruits.

It fell to a single digit for the week ended February 26, after a gap of nearly three months, at 9.52 per cent.

However, while international crude oil prices have softened recently, they are still hovering around $100 a barrel.

"Despite the moderation in food inflation in the past few weeks, upside risks to inflation have mounted, given the continuous surge in global crude oil prices and the uptick in international prices of food articles," the report said.

The easing of food inflation, however, may not prompt the Reserve Bank of India to halt monetary tightening as some essential commodities are still dearer and rising commodity and crude oil prices will have a bearing on the rate of price rise.

"The RBI is expected to continue with its current policy and hike short-term lending and borrowing rates by 25 basis points each in the next quarterly review later this month," said an economist.

The RBI will conduct its mid-quarterly policy review on March 17.

The RBI has hiked short-term rates seven times since March, 2010, to contain inflationary pressure.