The wholesale price-based inflation rate breached the five per cent-mark for the first time in 10 months, mainly driven by higher prices of food items like fruits, vegetables, milk and cereals along with some manufactured goods.
The inflation rate stood at 5.02 per cent for the week ended February 23, up from 4.89 per in the previous week. It was at 6.02 per cent a year ago, according to the Wholesale Price Index data released on Friday.
The is the first time in the last 10 months that inflation has breached RBI's tolerance level of 5 per cent, vindicating the cautious approach adopted by the Reserve Bank in its quarterly monetary review in January.
"It was going to happen because of the oil prices and may remain at this level (5 per cent) for some time," Prime Minister's Economic Advisory Council Member Saumitra Chaudhuri told PTI.
The data captures the impact of higher petroleum prices on commodities. On February 14, the government had increased prices of petrol and diesel by Rs 2 and Re 1 a litre respectively.
Concerned over the rising prices, Prime Minister Manmohan Singh had told Parliament that the government was committed to maintaining "reasonable" price stability at 4-5 per cent.
"We are committed to reasonable price stability but we will not be a party to maintain the so-called price stability by neglecting the prices that ought to be paid to our farmers," Singh had said.
Finance Minister P Chidambaram too, during his interaction with the chambers, had said: "One of the reasons why inflation is still a threat is food prices in India." The endeavour of the government would be to maintain a growth of 9 per cent and inflation rate at 4 per cent, he had said.