India’s headline inflation based on wholesale prices jumped to seven percent in October, the highest level in eight months, due to higher prices of fuel, food and manufactured goods, government data showed Thursday.
The country’s main inflation measure based on the Wholesale Price Index (WPI) was at 6.46 percent in the previous month and 7.32 percent in the corresponding month of last year, according to data released by the ministry of commerce and industry here.
Acceleration in inflation will put pressure on the Reserve Bank of India (RBI) to further tighten the monetary policy. The central bank has hiked key policy interest rates twice since September.
Food prices jumped by 18.19 percent year-on-year during the month under review. It had increased by 18.4 percent in September.
The headline inflation for August is revised sharply upward at 6.99 percent from 6.1 percent reported earlier.
Fuel and power inflation accelerated to 10.33 percent in October as compared to 10.08 percent in the previous month.
Manufactured products inflation rose to 2.5 percent in the month under review from 2.03 percent reported in the previous month.
Reacting on the monthly data, Assocham president Rana Kapoor said the rise in inflation was a “disturbing sign”.
He said acceleration in build-up inflation indicates that there are pain ahead for the economy.
Build up inflation rate in the financial year so far was six percent as compared to a build up rate of 4.66 percent in the corresponding period of the previous year.
“The inflationary pressure is being exerted from the primary articles and food prices, which are in a way, inexplicable given the fact that we had a good Monsoon this year. By now, the impact should have been visible,” said Kapoor, who is also managing director of Yes Bank.
Prices of vegetables jumped by 78.38 percent in October year-on-year. Onion price soared 278.21 percent, while fruits became costlier by 15.94 percent. Prices of egg, meat and fish soared by 17.47 percent year-on-year during the month under review.
Retail inflation based on the Consumer Price Index (CPI) rose to 10.09 percent in October as compared to 9.84 percent recorded in the previous month, according to data released by the Central Statistics Office (CSO) Tuesday.
In retail markets, prices of vegetables have soared 45.67 percent.
“Rising food prices continue to put pressure on the overall inflation, which makes it imperative to address the supply side bottlenecks at the earliest,” said Naina Lal Kidwai, president, Federation of Indian Chambers of Commerce and Industry (FICCI).
“There is an urgent need to take reform measures necessary for strengthening the agriculture supply chain and increasing cold storages across the country to counter the seasonal factors,” Kidwai said.
Chandrajit Banerjee, director general, Confederation of Indian Industry (CII), said high food prices calls for urgent steps to increase the efficiency of the food supplies chain through appropriate policy responses to cut down on intermediaries and reduce waste.
Banerjee, however, said the RBI should not tighten policy rates as it would hurt industry.
“The rising trajectory of inflation should not come in the way of the monetary policy slated to be announced next month as industry is already reeling under a protracted period of slowdown, with no visible signs of recovery in sight,” he said.