New Delhi, Apr 11 (PTI) Inflation surged to over three-year high of 7.41 per cent for the week ended March 29, mounting pressure on the Reserve Bank to further tighten money supply in its forthcoming annual credit policy later this month.
The wholesale price-based inflation, which stood at 7 per cent in the previous week, surged this time mainly on account of rising prices of fruits and vegetables, pulses, cereals, condiment and spices and some manufactured items.

Inflation soared despite high base of 5.94 per cent in the corresponding week a year ago, belying market expectations in the range of 7.05 per cent.

The high inflation may prompt RBI to take tough monetary measures to ease out inflationary pressure in its annual credit policy, scheduled to be announced on April 29. Yesterday, Prime Minister Manmohan Singh had even stated that high food prices may hurt economic growth and economic reforms process.

During the week, prices of fruits and vegetables shot up by 3 per cent, pulses went up by 1.2 per cent, condiments and spices by 2 per cent, wheat and fish marine each rose by 1 per cent.

However, prices of milk and maize softened by 1 per cent, at the same time, minerals group was up mainly driven by prices of limestone which jumped 14 per cent and steatite also moved by 2 per cent.

In the manufactured category, sugar prices went expensive by 2 per cent, groundnut oil and khandsari were dearer by 1 per cent. However, prices of imported edible oil got cheaper by 5 per cent and sun-flower oil by 3 per cent. PTI

Monetary tightening likely as wholesale inflation surge driven by food and manufactured price rises pressures policy response. Monetary tightening may be prompted by a sharp rise in wholesale price-based inflation to 7.41% for the week ended March 29, driven mainly by week-on-week increases in fruits and vegetables, pulses, cereals, condiments and spices and selected manufactured items. Specific item movements include rises in fruits and vegetables, pulses, wheat, marine fish, certain minerals and sugar, while milk, maize and some imported edible oils softened. The inflation surge, despite a high year-earlier base, is likely to influence the Reserve Bank's upcoming annual credit policy to restrain inflationary pressure.