The wholesale price inflation zoomed to an eight-year high of 7.39 per cent on rising crude and commodity prices.

Economists expect inflation to touch double digits in the near term, which will dim the prospects of any policy rate cut, as economic uncertainty looms large amid a second wave of coronavirus pandemic engulfing the country.

“The annual rate of inflation stood at 7.39 per cent (provisional) for the month of March 2021 over March 2020,” the commerce and industry ministry said.

Such a high level of WPI was last recorded in October 2012, when inflation was 7.4 per cent.

This is the third straight month of up-tick seen in the wholesale price index (WPI) based inflation. Wholesale inflation rose to 7.4 per cent in March against 4.17 per cent in February and 2.51 per cent in January, data showed.

Its retail price counterpart — the consumer price index - also saw inflation surging to a four-month high of 5.03 per cent in March on the back of a sharp rise in the food and core segment.

The low base of March last year, when data was computed with a low response rate because of the nationwide lockdown, contributed to a spike in inflation in March 2021. This is the third straight month of up-tick seen in the wholesale price index (WPI) based inflation.

“WPI inflation has printed much higher than our expectation of 6.1 per cent, with faster than anticipated upticks in inflation of core items and fuel. We expect the headline and core WPI to rise further

over the next two months, peaking at about 11.0-11.5 per cent and 8-8.5 per cent, respectively, in May 2021,” said Aditi Nayar, chief economist, Icra Ratings.

She said, “The expected trajectory of WPI inflation, and its partial transmission to CPI inflation going ahead, supports our view that there is negligible space for rate cuts to support growth, in spite of the growing uncertainty related to the surge in Covid-19 cases, localised restrictions and emerging concerns regarding migrants returning to the hinterland.”

Wholesale inflation in primary articles has risen to 6.4 per cent in March 2021 compared with 2.2 per cent in March 2020. Inflation in the food group rose by 3.3 per cent in March 2021 compared with 1.4 per cent in February 2021 and 4.6 per cent in the corresponding month last year on account of higher prices of pulses and fruits.