"This is a clear fallout of the upsurge witnessed in recent weeks in the wholesale price based annual inflation rate which has already crossed the 6 per cent mark already," said BB Bhatacharya, a leading economist with the Institute of Economic Growth (IEG).

Seen on the cumulative basis, the average inflation rate for the period April to July stands at 6.1 per cent as compared to the same period in the previous year. With this, the all india index for the CPI-UNME has shown a four points rise over that of the previous month to stand at 370.

Chennai has witnessed the highest price escalation based on the COI-UNME index out of the 59 urban centres that are selected to report for the CPI-based inflation for UNME. This is followed by Delhi and Mumbai. Calcutta has had only a marginal rise, as per the latest data of the Central Statistical Organisation (CSO), ministry of statistics and programme implementation.

Costs at the consumer levels are expected to spurt in the next six months due to subdued industrial production since there is pessimism about investment climate, as per NCAER's recent study.

"Consumer price based inflation rates for other categories like industrial workers (IW) as well as rural and agricultural labourers have also shown a spurt showing a strong correlation with the wholesale price based annual rate of inflation," said DH Pai Panandikar, an economist with the RPG Foundation.

It may be recalled that the WPI-based annual rate of inflation has made a sharp upsurge to touch 6.4 per cent for the latest recorded week July 29. On similar lines, for the latest period July, the annual inflation rate for industrial workers (IW) has also shown a sharp rise to 5.24 per cent from 5.01 per cent in the month before.

The major contributor to the inflationary spiral in the recent month has been primary articles which has made up two-third to the inflationary spiral. To add to this, there has been a fall in the industrial growth for the latest recorded period June. Even after allowing for some complacency for the redistribution of the weightages in the sector the fact remains that with higher interest rates the funding for investment for this sector will remain tight.

Over and above this, recent droughts and stock market fluctuations have also affected economic equilibrium with the proportion of firms in the capital goods and intermediate sectors showing a fall in inventories coupled and higher demands.