The recent trend of a decline in food prices however could be temporary as hail and heavy rains in the past two weeks have damaged crops. This is likely to keep core retail inflation elevated. Core inflation is calculated by excluding certain volatile items like food and fuel products.
Core consumer price index was estimated to have risen around 7.9 per cent in February from a year earlier, easing from an 8.1 per cent advance in January.Core inflation has been stuck at around 8 per cent for the past few months, a level Reserve Bank of India (RBI) chief Raghuram Rajan deems uncomfortably high.
In an attempt to quell price pressures, the RBI has raised interest rates three times since September, even though economic growth is languishing at around a decade-low of 4.5 per cent. The central bank is due to review rates on April 1.