The Reserve Bank on India on Thursday said that high inflation, primarily driven by food prices, has begun to spread to the broader economy now, but it is likely to ease in the coming months on the back of an expected moderation in food prices with the arrival of fresh crops.
"Inflation is now broad-based and spreading to areas other than food, especially manufacturing, and is not just restricted to food inflation," RBI deputy governor Subir Gokarn said.
Food inflation eased a bit to 17.81 per cent in the last week of February from 17.87 per cent in the previous week, but may not soothe overall inflation as fuel prices have risen sharply following the hike in duties.
The wholesale price index (WPI) inflation rose to 8.56 per cent in January, breaching the Reserve Bank's end-March projection of 8.5 per cent.
On a positive note, Gokarn said food inflation is likely to ease moving ahead on the back of an expected good Rabi crop, although certain commodity prices may stay high.
"We are in the early part of the Rabi harvest and there is a growing confidence that the harvest is reasonably good, although there will be pressure on specific commodities -- overall we should see some moderation in food prices," Gokarn said.
