The overall inflation in March eased to 6.89% on account of sharp decline in prices of onions, fruits and protein-based items, even as vegetables and pulses turned costlier.
Inflation, as measured by the Wholesale Price Index (WPI), was 6.95% in February. In March last year, it was 9.68%.
As per the official data released on Monday, inflation in food items was 9.94% in March, as against 6.07% in February.
Onion prices declined by (-)24.23% in March. The rate of decline was (-)48.50% in February.
Besides, eggs, meat and fish prices rose 17.71% during the month, lower from 20% in February.
Pulses turned expensive by 10.05% and vegetables by 30.57% during March. In February, the rate of price rise in vegetables was 1.52%.
Milk became expensive by 15.29%, while rice and cereals turned costlier by 4.73% and 4.41% respectively. Prices of potato too rose by 11.60%.
Food articles have 14.3% share in the WPI basket.
The manufactured goods showed moderation in inflation to 4.87%, from 5.75%. This may have a bearing on the annual monetary policy to be announced by the Reserve bank tomorrow.
The inflation number for March remained marginally above the projections made by finance ministry, which had expected it to be around 6.5%.
The headline inflation number for January was revised upwards to 6.89 %, up from the provisional estimate of 6.55%.
Inflation in overall primary articles rose sharply to 9.62% in March, from 6.28% in February.
In manufactured items, it has been high since February 2011, when it crossed the 6% mark.
Year-on-year, among manufactured items, iron grew dearer by 17.18% and edible oil prices rose by 9.78%. Inflation in tobacco products and basic metals was 8.22% and 9.51% respectively.
Non-food primary articles, which include fibres and oilseeds, was however lower at (-)1.20% in March. In February, it was (-)2.56%.
Inflation in the fuel and power segment was 10.41% on an annual basis. The rate of price rise was 12.83% in the previous month.
Experts said the inflationary pressure, driven by prices of food articles, will keep the pressure on the government to remove supply side bottlenecks.
Headline inflation was near double digit for most of 2010 and 2011. The apex bank hiked key policy rates 13 times, totalling 350 basis points between March 2010 and October 2011 to tame inflation.
Since January, RBI has resorted to injecting liquidity into the financial system, by reducing Cash Reserve Ratio for banks. Besides, it has called for fiscal steps by the government to combat inflation.