January 2011 is watching slow decline as well as generalization in inflation. Inflation is becoming broader and thus has increased the chances of further monetary action by the central bank.

As per data released on Monday, in January wholesale price of a basket of goods measured by the wholesale price index rose 8.23% as compared to last year, down marginally from 8.43% in December. This year November also witnessed a sharp upward in inflation to 8.08% from 7.44% year ago.

Economists believe that overall inflation will remain sticky because inflation will drop faster due to favorable base effects but the 1.2% rise in index underscore the price pressures making inflation oppressive.

It is also believed that RBI would bring some changes in the rates in its policy review on March 17. RBI has mentioned in its January monetary policy that is expecting that inflation will cut down to 7% by March end.

C Rangarajan, chairman of Prime Ministers Economic Advisory Council said that RBI’s continuous action is required to tighten the monetary policy.

Central bank is also worried about the spreading of inflation from food and fuel to other segment which is making inflation more generalized.