Adding to the pressure on the Reserve Bank of India (RBI) to raise key policy rates, headline inflation - based on the Wholesale Price Index (WPI) - zoomed to an eight-month high of 7 per cent in October.
The surge in the wholesale level inflation, up from September’s 6.46 per cent, was mainly on account of high fuel and food prices, especially vegetables, data released by the government on Thursday showed.
While food prices inflation was at 18.19 per cent in the latest reported month as compared with 18.4 per cent the previous month, fuel prices increased to 10.33 per cent in October from 9.64 per cent in September.
At the wholesale level, inflation in the vegetable segment increased 78.4 per cent, spurred by a whopping 278 per cent year-on-year increase in onions. Adding to the woes, for August, the final WPI-based inflation was substantially revised upwards to 6.99 per cent from the provisional 6.1 per cent reported earlier.
Today’s WPI-based inflation data comes on the back of data released by the government on Tuesday that showed that while factory output rose to 2 per cent in September after expanding 0.4 per cent in August, retail inflation based on the Consumer Price Index had quickened to 10.09 per cent in October from 9.84 per cent the previous month, primarily on account of higher food prices.
While inflation in the vegetable segment stood at 78.38 per cent in October, the rate of price rise in onion continued to remain high at 278.21 per cent.
Protein rich items like egg, meat and fish became dearer by 17.47 per cent in October as against 13.37 per cent in the previous month.
While there was slight moderation in prices of cereals and rice, wheat became dearer in October. The inflation in wheat was at 7.88 per cent last month as against 5.9 per cent in September.
The data further revealed that inflation in the manufactured products has inched up to 2.5 per cent versus 2.03 per cent in September.
The Reserve Bank had increased its key rate (repo rate) twice in its last two monetary policy