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Consumer price index (CPI)-based inflation rose to this financial year's highest rate of 3.58 per cent in October, from 3.28 per cent in September, with food and fuel prices increasing at a higher pace.
This could stop the Reserve Bank (RBI) from cutting rates in its policy review next month to spur falling industrial growth.
However, inflation in various household goods and services declined, implying the goods and services tax (GST) did not have much impact. The GST Council's recent decision to cut the rates on around 200 items is likely to further dampen the rate of price rise of these items.
Food inflation moved up to 1.9 per cent in October from 1.25 per cent in September. The main reason was vegetable prices, with inflation in these up from 3.92 per cent to 7.4 per cent. Onions and tomatoes appear the main causes, though the government did not issue the details.
Elsewhere among food items, prices moved in a narrow range. Pulses continued to show a fall in prices at a higher pace, of 23.1 per cent compared to 22.5 per cent in September.
Inflation in fuel and light was up at 6.36 per cent from 5.56 per cent as global crude oil prices rose and despite the cut in excise duty. The average price of the Indian basket of crude oil rose to $56.06 a barrel in October from $54.52 in September.
The effect of house rent allowance (HRA) on rent was visible as inflation under this head rose to 6.6 per cent, from 6.1 per cent.
Inflation in household goods and services such as health, transport and communication, recreation & amusement and education declined in October. However, inflation in personal care and effects rose to 3.3 per cent, from 2.95 per cent. This could start declining from this week, as most of these products will attract less GST.
RBI had projected inflation to rise to 4.2-4.6 per cent in the second half of the financial year (October to March). Inflation was less than that in October but, as mentioned earlier, the rise could stop the central bank from cutting rates to push growth. The rise in the index of industrial production (IIP) fell to 3.8 per cent in September, from 4.2 per cent in August.