High prices of vegetables and manufactured items drove the headline inflation in March to 8.98%, way above the RBI's expectation of 8%.
The overall inflation measured on the basis of Wholesale Price Index (WPI) was 8.31% in February.
The rise in overall inflation for the second month in a row may prompt the central bank to go for another round of policy rate hikes in its policy review meeting, scheduled for May 3.
As per the official data released today, the high inflation was on account of rising prices of manufactured items, milk, vegetable and fruits. In addition, high fuel costs due to spiralling international crude oil prices also contributed to the phenomenon.
Besides, food inflation, which accounts for nearly 15% of overall WPI inflation, stood at 8.28% for the week ended April 2.
The prices of primary articles -- food, non-food articles and minerals -- shot up by 12.96% on an annual basis, according to the official data released today.
Food articles grew expensive by 9.47%, cereals by 3.96% and, rice and wheat by 2.69% and 0.75%, respectively.
However, the speed at which pulses price rose eased to 4.17% on an annual basis.
During the month, fuel and power prices went up by 12.92%, driven mainly by a 23.14% rise in petrol prices and a 14.99% jump in cooking gas (LPG) rates.
At the same time, the manufactured goods group index rose by 6.21% on an annual basis. Manufactured items have the highest weight of 64.9% in the WPI.
The WPI inflation for January was revised upwards to 9.35% from the provisional estimates of 8.23%.
