The demonstration underscored how inflation is stoking public anger against the government and revitalizing the Hindu-nationalist opposition Bharatiya Janata Party (BJP) a year after it lost a general election to Congress.
Vehicles crawled along roads in the center of the capital as protesters, bussed in by the BJP from various states, carrying saffron flags and posters shouted anti-government slogans.
The BJP sees rising prices for grains, sugar and lentils denting Congress's fortunes before eight state elections this year and in 2011, with government supporters in poorer, rural India feeling the pinch.
"I have always voted for the Congress party but I am very disappointed at the way they have handled price rises. They have left us nowhere, I do not know how I will support my family," said Mohan Singh, a farmer taking part in the protests.
Sugar is close to 30 rupees ($0.67) a kilogram. Some lentils cost as much as 100 rupees a kilogram in a country where the World Bank says more than 400 million people live on less than $1.25 a day.
Many credit welfare schemes aimed at the poor for the Congress-led coalition's 2009 election victory.
A shift could hurt Congress's ambitions to win an outright majority and push through painful economic reforms needed to catch up with peer China.
The government has focused so far on keeping fast economic growth on track rather than clamping down on inflation.
Officials have talked down the need for the central bank to tighten monetary policy aggressively.
"Only the wrong economic policies of the government are to be blamed for this horrible mess the people are in. Prices of sugar, pulses, every commodity you can think of, have skyrocketed," BJP President Nitin Gadkari told the protesters.
"The government will face the people's wrath." High food prices have unseated governments in the past. In 1998, Congress won three states amid voter discontent after onion prices soared.
The BJP said 200,000 protesters had gathered but a senior police officer put the crowd at half that number. Police stopped the march before it reached parliament and briefly detained protest leaders, including Gadkari.
The opposition has demanded a special vote in Parliament to force Prime Minister Manmohan Singh's government to resign over an unpopular hike in fuel prices that has helped push wholesale inflation to 9.9 percent, the highest since October 2008.
The demand has not been accepted by parliament yet but any vote would be before April 29, when the government's budget is due to be put up for approval.
BJP lawmakers walked out of parliament earlier on Wednesday shouting slogans against what they said was the government's inefficiency in controlling prices.
The rally is a test of strength for Gadkari, a relative political unknown picked to head the BJP last year, and a chance to gain the support of voters who abandoned the party over its perceived urban bias.
Policymakers and government advisers have said inflation has peaked and would begin declining as a bountiful summer harvest and a good monsoon improve food supply prospects.
