Data released by the National Statistical Office (NSO) on Monday showed that the retail inflation rate in India, measured by the Consumer Price Index (CPI), rose to an eight-month high at 6.07 per cent in February 2022 compared to 6.01 per cent in January.

This is the second consecutive month now that the retail inflation reading has breached the upper limit of the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC).

A Reuters poll of 36 economists had forecast that the reading had likely slipped to 5.93 per cent in February on an annual basis.

Earlier today, the commerce ministry released data for wholesale inflation measured by the Wholesale Price Index (WPI), which also rose to 13.11 per cent year-on-year in February. WPI has now stayed in double digits for 11 months.

"CPI inflation reading came marginally north of RBIs upper threshold limit. The inflation trajectory is weighed heavily on the upside with elevated commodity prices, pass-through of earlier fuel price hikes and higher raw material costs. However, we do not expect any shift in policy decisions and stance in the near term as RBI continues to focus on durable growth," said Upasna Bhardwaj, Senior Economist at Kotak Mahindra Bank.

The RBI's policy target is more CPI-centric, and now the RBI may find itself in a tricky situation where it would want to increase the rates to curb the rising inflation.

Last week, inflation in the United States accelerated to a fresh 40-year high on account of rising gasoline, food and housing costs. The consumer price index jumped 7.9 per cent from a year earlier, following a 7.5 per cent annual gain in January. The Federal Reserve has now made it clear that it intends to raise its target fund rates by a quarter percentage point from zero and is expected to announce the same on March 16.

CPI Inflation Rises To 6.07% In Feb; Breaches RBI's Threshold For Second Consecutive Month