With the rise of food and fuel prices, wholesale inflation on Tuesday shot up to a 6-month high of 3.59 per cent in October, according to the Government data.
As per the Wholesale Price Index or 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.
As per the Government data, it showed that inflation in food articles more than doubled to 4.30 per cent in October.
However, Economic Affairs Secretary SC Garg on Tuesday attributed the rise in both wholesale and retail inflation numbers to seasonal factors and expressed hope that the rate of price rise would remain below the 4 per cent limit for the fiscal.
“Retail inflation at 3.58 per cent. Wholesale price inflation at 3.59 per cent. Inflation riding from last month’s levels largely on account of food especially vegetables and protein products,” Garg tweeted.
India Inc is also concerned over the wholesale price rise due to adverse weather conditions.
“Both wholesale and retail prices edged up in the month of October. The increase was led by firming up of food prices with vegetables segment remaining a key stress point at this juncture. However, this is due to adverse weather conditions and the situation should ease out in the coming months,” said Pankaj Patel, President, FICCI.
“FICCI would like to reiterate that under the present scenario inflation targeting by the central bank may not be the best approach. The manufacturing sector is showing signs of recovery and it is important to support this improvement through all policy levers. The high real interest rates remain a challenge for the industry,” Patel added.
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.