Wholesale prices based inflation rate rose by 0.26 per cent to stand at 4.28 per cent during the week ended March 11 against 4.02 per cent for the previous week due to higher prices of some food items, electricity, lubricants and manufactured products.
The inflation had touched 5.40 per cent during the corresponding week of 2005.
Inflation rose after falling for the previous two consecutive weeks.
This is despite bankers complaining of tightening liquidity in the system.
Reserve Bank Governor Y V Reddy, who will meet bankers early next week and is expected to announce measures to increase availability of lendable money in the banking system will have to strike a balance between the bankers demand and its effect on inflation.
Finance Minister P Chidambaram, who had met chairmen of PSU banks on Thursday, had said that the Governor would announce measure on addressing the problem of liquidity by March 31.
The bankers had suggested to the finance minister various options to increase the liquidity in the system like a cut in cash reserve ratio, using the surplus statutory liquidity ratio and unwinding of market stabilisation scheme.
The Governor will have to assess the impact of its measures of easing liquidity on inflation in the coming days before he takes further steps in its quarterly review of monetary policy on April 18.Do you want to discuss stock tips? Do you know a hot one? Join the Stock Market Investments Discussion Group