Food prices push Feb WPI inflation to 9.89% YoY

India's wholesale price index rose 9.89% in February from a year earlier, driven by firm food prices, government data showed on Monday.

The numbers were roughly on expected lines, the chief economic adviser in the Finance Ministry, Kaushik Basu, said on Monday."Food inflation is driven by the base effect."

He expects the increase in inflation to continue for another month and sees it start to die out from May. The full impact of fuel price hike is not reflected in these numbers, Basu cautioned.

It was above a median forecast of 9.62% annual rise in a Reuters poll of economists and was higher than previous month's annual rise of 8.56%.

The food articles index rose an annual 17.79% in February, while, the manufacturing products index in the WPI rose an annual 7.42% in the same month.

"Inflation in India should ease over a period of time and the Reserve Bank of India will look at all parameters before taking a view at the April policy," RBI Deputy Governor Shyamala Gopinath said.

"There could be some demand side pressures reflected in inflation for manufacturing. We do think that it should reduce, we are reviewing all our parameters and indicators for the April policy," she said, adding that the Reserve Bank would closely monitor bond yields and the government borrowing programme.

Reserve Bank of India (RBI) Deputy Governor Subir Gokarn had said last week the Reserve Bank did not see double-digit inflation persisting in the economy.

December's WPI inflation have been revised to 8.1% from a year earlier, from 7.31% earlier. The annual inflation rate was 3.5% in February 2009.

The RBI at its January policy review had raised end-March wholesale price inflation projection to 8.5% from 6.5% with an upward bias forecast earlier.