"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 told reporters here today.
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.
Asked whether WPI-inflation could turn into double-digits, the deputy governor Gokarn said though there is a chance of this happening, double-digit inflation is unlikely to sustain in the economy.
"Double-digit inflation could happen...numbers are very volatile. But it is a consequence of food prices shooting up...if double-digit inflation happens, it won't persist," Gokarn said, and pointed out that during the past few weeks, food prices have started to moderate.
Recently, finance minister Pranab Mukherjee had said food inflation was coming down gradually and that inflationary pressures were not rising because of the earlier monetary accommodative policy of the RBI, but due to the rise in food prices due to supply shortage.
