New Delhi, Apr 16 (IANS): Inflation declined marginally to 6.89 percent in March as compared to 6.95 percent in the previous month even as prices of vegetables, pulses and milk rose sharply, adding to the Reserve Bank of India's dilemma over rates cut in the annual monetary policy Tuesday.

The monthly wholesale price index data released by the ministry of commerce and industry Monday showed that inflationary pressure continued in the system.

Prices of vegetables surged by 30.57 percent year-on-year in the month under review, milk became costlier by 15.29 percent, pulses became dearer by 10.05 percent and prices of egg, meat and fish rose by 17.71 percent.

However, onion, fruits, wheat, fibres and non-food articles became cheaper during the last month of 2011-12 when compared to the price of these items in the corresponding month of previous year.

The government revised upward the January inflation data to 6.89 percent as compared 6.55 percent announced earlier.

Build-up inflation in 2011-12 was 6.89 percent as compared to a build up of 9.68 percent in the previous year.

Manufactured products, which have almost 65 percent weight in the Wholesale Price Index (WPI), showed moderation in prices. Inflation in manufactured products moderated to 4.87 percent in March as compared to 5.75 percent in the previous month.

Industrial output grew by lower than expected 4.1 percent in February, according to official data released last week.

Continued inflationary pressure and lower than expected growth have added to the dilemma of the central bank.

It is widely expected that the Reserve Bank of India would lower policy rates by 0.25 percent Tuesday in its monetary policy for 2012-13. The RBI has not cut rates in the last three years.