The wholesale price index (WPI) rose a faster-than-expected 6.84 percent in February, clouding the policy outlook ahead of a central bank meeting next week.
Here is what the experts have to say about the unexpected rise in inflation:ROBERT PRIOR-WANDESFORDE, DIRECTOR, ASIAN ECONOMICS RESEARCH, CREDIT SUISSE, SINGAPORE
"The core inflation surprisingly came down to 3.8 percent, lowest since March 2010. That will give some comfort to the Reserve Bank of India to cut rates, though it would have liked the headline number to come down further. But it would be strange not to cut interest rates on the basis of LPG and onion prices going up."
ABHEEK BARUA, CHIEF ECONOMIST, HDFC BANK, NEW DELHI
"The increase in WPI over the anticipated level seems to be on the back of pricing in of increase in bulk diesel prices. That perhaps partly explains the gap between consensus expectations and the final print.
"I have held the view that the RBI will go in for a 25 basis points cut in the repo rate based on a number of factors. One thing is the high and rising CPI, so RBI cannot go for a sharp rate cut and give aggressive guidance. On the other hand, there have been tangible improvements in the fiscal situation. So given these factors on balance, there would be a rate cut on Tuesday and perhaps one more in May. And, these rate cuts would be justified on balance of risk, and today's data does not substantially alter it.
"We are looking at inflation bottoming out in September around 6.5 percent."
RUPA REGE NITSURE, CHIEF ECONOMIST, BANK OF BARODA, MUMBAI
"The core inflation number has fallen below 4 percent and it shows how significantly the demand deficit has grown in the manufacturing sector. And that is why despite elevated cost pressures, companies are unable to pass on these pressures to consumers.
"Today's inflation data combined with continuous weakness in the real economic activities, in my opinion, would trigger the RBI to cut rates by at least 25 basis points on Tuesday."
RAHUL BAJORIA, REGIONAL ECONOMIST, BARCLAYS CAPITAL, SINGAPORE"Given that non-food manufacturing inflation is pretty weak, that will provide some room for the inflation print to stay in a range going ahead. Also, it is good to see that they have included the unsubsidised version of LPG (cooking gas) in the fuel index which has pushed up the fuel inflation.
"Though the headline number is still high, the break-up shows that inflation will continue to ease going ahead and along with the government's fiscal consolidation efforts, there is even more reason to expect RBI to cut rates in March and for some more time going ahead."
JYOTI NARASIMHAN, SENIOR PRINCIPAL ECONOMIST, IHS GLOBAL INSIGHT, BANGALORE
"The uptick in inflation is disappointing. But we continue to expect the RBI to cut the repo by an additional 25 basis points next week, despite the wide current account deficit and inflation being above the RBI's comfort zone. The recent budget for FY2013/14 also struck the right note between fiscal consolidation and inevitable spending increases in a pre-election year...
"Nonetheless, the RBI will remain cautious and focused on inflation for the present, even while acknowledging weak investment conditions."
INDRANIL PAN, CHIEF ECONOMIST, KOTAK MAHINDRA BANK, MUMBAI
"We are looking at a 25 basis point reduction in the repo rate on Tuesday. The point that I am clearly trying to make is that unless the Reserve Bank had a trajectory of cuts in mind, it would not have done that 25 basis point cut in January. If it does not have a trajectory, the importance of that 25 basis point easing will be lost. Apart from the 25 basis point reduction on March 19, I think there will be another 25 basis point cut in 2013."
MAHENDRA JAJOO, HEAD OF FIXED INCOME, PRAMERICA MUTUAL FUND, MUMBAI
"The core inflation is down and there are a number of supporting statements from the central bank. I expect the bond market to remain supported on this. I am expecting a 25 basis points cut both in the repo rate and cash reserve ratio."
ANJALI VERMA, ECONOMIST AT PHILLIPCAPITAL, MUMBAI
"The core inflation at 3.8 percent is comfortable. I expect the RBI to cut rates by 25 basis points in the policy because growth is low at 4.5 percent, fiscal consolidation is ahead of expectations and core inflation is falling substantially."
