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Inflation, based on wholesale rates, shot up to a 6-month high of 3.59 per cent in October as prices of food items and fuel rose sharply. As per the Wholesale Price Index (WPI), inflation was 2.60 per cent in September. In October last year, it was 1.27 per cent. The inflation figure for October this year is the highest since April, when it was at 3.85 per cent. The government data released today showed that inflation in food articles more than doubled to 4.30 per cent in October. In case of onions, it skyrocketed to 127.04 per cent, while for vegetables it was 36.61 per cent. In the eggs, meat and fish segment, the rate of price rise was 5.76 per cent. ICRA Principal Economist Aditi Nayar said the spike in WPI inflation was broad-based, led by vegetables, fruit, crude oil, natural gas, fuels, minerals and electricity. "The sharper-than-anticipated uptick in the WPI inflation reinforces our expectation of a status quo in the upcoming monetary policy review," Nayar said. Reserve Bank of India is scheduled to come out with its next monetary policy review on December 6. Inflation in manufactured products saw a slight dip to 2.62 per cent, as against 2.72 per cent in September. In the fuel and power segment, it rose to 10.52 per cent, as against 9.01 per cent in September. Fuel inflation has remained high for the past three months as petrol and diesel prices continued to rule high, tracking global crude oil rates.
Power tariffs shot through the roof on lower domestic production. Industry chamber Assocham said the continuous increase in petrol and diesel prices must be taken care of by policymakers since it may have impact on the import bill and, subsequently, on exchange rates. "It may also have a negative impact on input prices for the industry which has already started to feel pressure on its profitability," it added. Pulses continued to witness deflation at 31.05 per cent. Likewise, in potato deflation was at 44.29 per cent and wheat at 1.99 per cent in October. As per the Consumer Price Index (CPI) data released yesterday, retail inflation for October rose to a 7-month high of 3.58 per cent on costlier food items, especially vegetables. Besides, industrial production for September expanded at 3.8 per cent, on poor showing by the manufacturing sector coupled with decline in consumer durables output. Last month, the Reserve Bank kept benchmark interest rate unchanged on fears of rising inflation while lowering growth forecast to 6.7 per cent for the current fiscal. RBI also raised its inflation forecast to the 4.2-4.6 per cent range for the rest of the current fiscal as against 4-4.5 per cent previously.
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