India's retail inflation saw a sharp rise to 6.95% in March compared to 6.07% in February over higher food prices, the data released by the Ministry of Statistics and Programme Implementation showed. The CPI inflation during the corresponding period last year stood at 4.29%.
Among all the baskets, food inflation rose to 7.47% in March 2022 compared to 5.85% in February 2022. The food basket accounts for half of India's inflation basket. On a month-on-month basis, the overall retail inflation saw a 0.96% change, while rural and urban inflation grew at 1.20% and 0.60%, respectively.
India's retail inflation has again breached the RBI's upper limit. The central bank has set a medium-term CPI inflation target at 4% within a band of +/- 2 per cent.
The retail inflation was 6.01% in January 2022. The urban retail inflation grew to 6.12% in March from 5.75% in February, while the rural retail inflation grew to 7.66% from 6.38% in February.
At the bi-monthly meeting of the Monetary Policy Committee (MPC), Reserve Bank Governor Shaktikanta Das raised the inflation projection for the current fiscal to 5.7%, up from the earlier estimation of 4.5% in the face of rising commodity and crude oil prices.
He had said that inflation is now projected at 5.7% in 2022-23 with Q1 at 6.3%, Q2 at 5%, Q3 at 5.4% and Q4 at 5.1%.
As per the RBI, pick-up in food inflation contributed the most to headline inflation, with inflation of cereals, vegetables, spices and protein-based food items like eggs, meat and fish being the key drivers.
Looking ahead, the inflation trajectory is seen depending critically upon the evolving geopolitical situation and its impact on global commodity prices and logistics. As per the RBI, in this scenario, pro-active supply management is critical to contain inflation.
Meanwhile, the index of industrial production (IIP) grew 1.7% in February vs 1.3% in January 2022, the ministry data showed.