Despite assurances from policy-makers, annual rate of inflation rose to 8.31 percent for February from 8.23 percent for the month before, creating pressure on the Reserve Bank on India (RBI) to raise rates this Thursday in its third quarter monetary policy review.

RBI has already raised key policy rates seven times in a year from March, 2010. Experts believe that RBI this time too is all set to increase its key lending and borrowing rates to rein in inflation.

It is said that pressure will also mount from the government on the apex bank to rein in prices ahead of assembly elections in five states April-May.

A higher repo, the rate at RBI lends to lenders, raises the banks' borrowing costs prompting them to raise interest rates for final home, auto and corporate borrowers. A higher reverse repo — the rate at which RBI absorbs excess cash — means it would suck cash from the system to stymie demand and cool prices.

Today's inflation data released by the industry ministry further showed that the provisional annual rate of inflation for December, which was earier pegged at 8.43 percent for December, stood revised to 9.41 percent.

The limited weekly data for the week ended Feb 26 had showed that the food inflation had declined to 9.52 percent from 10.39 percent the earlier week, even though prices of vegetables, milk, eggs, meat and poultry still remained high.

Both Prime Minister Manmohan Singh and Finance Minister Pranab Mukherjee had assured the Lok Sabha recently that food prices will come down in the near term and that the overall inflation rate will be no more than 7 percent by March-end.

"By the end of this fiscal year, inflation will be controlled. I expect the situation to improve," the prime minister had said.