Costly vegetables push Oct inflation to 8-month high of 7%
The high food prices called for urgent steps to increase the efficiency of the food supplies chain reducing the middle men
New Delhi: Spiraling prices of onion and other vegetables pushed the wholesale inflation to an eight month high of 7 per cent in October and prompt the RBI to consider further hike in interest rate to check price rise.
The inflation measured on the wholesale price index (WPI) was at 6.46 per cent in the previous month and 7.32 per cent in the October 2012. As per the government data released today, rate of price rise in food articles was at 18.19 per cent in October.
“The high food prices calls for urgent steps to increase the efficiency of the food supplies chain through appropriate policy responses to cut down on intermediaries and reduce waste,” industry chamber CII said. The jump in WPI inflation comes after the October retail inflation increased to 10.1 per cent, the highest in the past seven months.
While inflation in the vegetable segment stood at 78.38 per cent in October, the rate of price rise in onion continued to remain high at 278.21 per cent.
Protein rich items like egg, meat and fish became dearer by 17.47 per cent against 13.37 per cent in September. RBI Governor Raghuram Rajan had yesterday described the food inflation as “worryingly high”.
RBI increased the key rate twice in its last two monetary policy reviews with an aim to check high inflation. As per the data, while there was slight moderation in prices of cereals and rice, wheat became dearer in October.
The inflation in wheat was at 7.88 per cent last month as against 5.9 per cent in September. It further showed inflation in the manufactured products inching up to 2.5 per cent versus 2.03 per cent in September.
Assocham said while jump in inflation is surely a disturbing sign, the rise in ‘build-up inflation’ to 6 per cent in the fiscal so far clearly indicates that there is still pain ahead.
The WPI data released by the Department of Industrial Policy and Promotion (DIPP) further revealed that inflation in the primary articles segment also inched up to 14.68 per cent in October from 13.54 per cent in the previous month. Inflation in fuel and power segment, at the wholesale level, too was marginally up at 10.33 per cent.
“Build up inflation rate in the financial year so far was 6 per cent compared to a build up rate of 4.66 per cent in the corresponding period of the previous year,” the release said.
Meanwhile, the WPI inflation for the month of August has been revised upwards to 6.99 per cent from the earlier estimated 6.1 per cent. Commenting on the data, Leif Eskesen, Chief Economist for India & ASEAN at HSBC, said this underscores the need for stepped up structural reform implementation and a hawkish central bank to scare away the inflation ghost.
Bhupali Gursale, Economist at Angel Broking, said, “In context of the monetary policy stance going forward, we are watchful for additional data points on inflation as well as movement in the currency since these are likely to continue determining policy action.”
RBI would publish its mid-quarter monetary policy review on December 18.