Inflation up at 7.31% in Dec

The headline inflation rate, as measured by the Wholesale Price Index (WPI), rose sharply to 7.31 per cent for the month of December primarily due to rising prices of primary articles, especially food items.

The inflation rate shot past the Reserve Bank of India’s (RBI’s) forecast that inflation would reach 6.5 per cent only by the end of this financial year.

The inflation rate was 4.78 per cent for the month of November and 6.15 per cent during the corresponding month of the previous year. The rise in inflation in the current financial year so far is 8.02 per cent as against a build-up of 1.86 per cent in the corresponding period of the previous year.

“The rapid rise in the inflation rate has been very surprising. The RBI estimate of 6.5 per cent has been breached three months in advance. We were also expecting the inflation rate to be 7 per cent by March-end and we will have to revise it upwards,” said DK Joshi, principal economist at Crisil, a ratings firm.

Inflation rates for cereal and pulses, which constitute the essential consumption basket, posted double-digit growth rates of 13 per cent and 41.6 per cent, respectively, for December.