According to latest data released by the government, India's wholesale-price index, which is the measure for inflation, rose 6.95 percent in the month of February.

The benchmark index was recorded at 6.55 percent in January, according to a statement from the union commerce ministry. The inflation as recorded at 9.54 per cent in February 2011. Food inflation was 6.07 per cent in February compared to 0.52 per cent in January.

Pulses became expensive by 7.91 per cent and vegetables became dearer by 1.52 per cent in the month. Egg, meat and fish prices rose 20% during the month, from 18.63% in January. The prices of milk rose 11.70 per cent while rice and cereals prices increased 1.53% and 1.71% respectively.

The Reserve Bank of India has said yesterday that a rise in crude oil prices this year would impact influence. The central bank had indicated that it would reduce borrowing costs if the inflation would continue to fall. The government is also required to take steps to control the fiscal deficit in the year.

The Reserve Bank of India (RBI) has reduced the cash reserve ratio (CRR) on Friday.

The reduction is larger than expected as the market analysts believed that the central bank might reduce the CRR by 50 bps. The 75 bps cut would increase the liquidity by Rs 48,000 in the country's economy. The additional funds in the economy would help the economy in the coming motnsh as the liquidity position is expected to become tighter in mid-March due to advance tax outflows.

The RBI governor D Subbarao has already indicated that the central bank is considering a reversal of the monetary policy as the inflation is falling and the high interest rates have affected economic growth in the country.