New Delhi, March 20: The rate of inflation surged to 5.92 per cent, the highest in the past one year, raising concerns about economic growth. The rise will make it more difficult for the Reserve Bank of India to reduce interest rates to boost consumer demand.

The wholesale price index rose to 5.92 per cent for the week ended March 8 from 5.11 per cent in the previous week, data released today said.

The rate was 6.51 per cent during the corresponding week of the previous year.

India’s inflation rate has got linked with global price trends with commodity and food prices contributing the most to the domestic inflation data, analysts said.

During the week, food articles such as arhar, gram, moong, maize, fruits and vegetables as well as condiments and spices have become dearer. Prices of furnace or industrial oil went up by 2 per cent. Prices of manufactured products such as imported edible oil, coconut oil and mustard oil also rose.

The government had announced a ban on the export of all edible oils with effect from March 17 for a year to curb their rising prices.

C. Rangarajan, chairman of the Prime Minister’s Economic Advisory Council, last evening said the inflation rate was a little above the comfort level and did not favour a cut in interest rates.

“We would be surprised if the RBI cuts interest rates, which the industry is eagerly awaiting, to boost growth and consumer demand,” said Arvind Mahajan, executive director of KPMG.

He said, “The central bank could maintain status quo on PLR, CRR and the repo rate and decide to wait and watch. However, if it takes a short-term view of containing inflation, it may tighten liquidity, which could affect consumer demand.”

Mahajan said, “Being an election year, the government could widen the scope of the farm loan waiver, which would put more money in the hands of farmers and the banking system and spur demand.”

The rate of inflation has risen at a time when core sector growth has declined sharply.

Growth in the six infrastructure sectors, which account for about 25 per cent of industrial production, fell sharply in January to 4.2 per cent from 8.3 per cent in the same month last year.

Edible oils

The government has decided to slash import duties on edible oils to make them cheaper.

In the wake of an over 30 per cent increase in the retail prices of most cooking oils, the government may cut effective duties on palm oil to bring them down to 10 per cent, a senior official said today.

There may also be a similar cut for imported soyabean oil.

“The decision has been taken and the notification on the duty cuts can come any day,” the official said.