UPDATE: Inflation jumps to 7.31% in Dec

Wholesale prices-based inflation leaped to 7.31 per cent in December, shooting past RBI's forecast of 6.5 per cent-level by this fiscal end, as food items such as sugar, potatoes and pulses turned costlier. Overall inflation in November was 4.78 per cent.

However, food inflation (prices of non-processed food articles) measured separately for the week ending January 2, eased a bit to 17.28 per cent from 18.22 per cent a week ago.

If this trend in food inflation continues in the weeks ahead, then overall inflation may also fall.

Sugar, whose prices have become a cause of concern for the government with retail prices nearing Rs 50 a kg, rose 53.98 per cent in December year-on-year. Yesterday, the government announced a slew of measures to tame sugar prices.

In the month of December, food inflation stood at 19.17 per cent, whereas food inflation in manufactured items was as high as 26.40 per cent.

Potato prices more than doubled in December, while pulses turned expensive by more than 40 per cent.

However, other manufactured inflation remained subdued.

To prevent food inflation from spreading to other items, RBI in its monetary policy later this month may announce measures to squeeze money supply, anaylsts said.