Agencies/New Delhi

India’s inflation increased unexpectedly last month, data showed yesterday, tempering hopes of an interest rate cut next week after the central bank chief warned about rising prices.

After four months of easing, the widely watched Wholesale Price Index rose to 6.84% in February from a year earlier, up from 6.62% in the previous month, due to a sharp increase in fuel, food and vegetables prices.

Onion became costlier by 154.33%, potato prices almost doubled and overall vegetables prices increased by 12.11%.

There was also a sharp increase in cereals and fuel prices that hit the common people hard.

The new data comes after Reserve Bank of India governor Duvvuri Subbarao reiterated his concern late Wednesday about persistently high inflation, which he said hurt growth prospects when above 6.0%.

The RBI is due to meet on Tuesday in the financial capital Mumbai to decide on interest rates, which it cut in January for the first time in nine months under pressure from government and business leaders to help spur the flagging economy.

“It’s not possible to bring inflation down without sacrificing some growth. But... you have to realise that growth sacrifice is only in the short term,” Subbarao said in a speech at the London School of Economics.

“In the medium term, low inflation - price stability - is very important for sustained growth,” he said in defence of criticism that the RBI is damaging growth by not lowering borrowing costs quickly enough.

He described inflation as “still high” and “stubborn.”

While the RBI will deliberate the latest inflation rise at next week’s meeting, it is unlikely to sway the decision, according to Glenn Levine, senior economist at Moody’s Analytics.

“The recent rumblings from the RBI, including praise for the government’s reforms and recent budget, suggest that a small March rate cut is likely,” he said in a note, predicting a 25-basis-point cut in the repo rate.

In January, the RBI cut the benchmark repo rate, at which it lends to commercial banks, by 25 basis points to 7.75% - the first cut since April last year.