Essential prices rose exorbitantly on yearly basis, fuelling inflation to 0.37 per cent during the second week of September from 0.12 per cent a week ago when it first made it into positive territory after a gap of 13 weeks.

Overall prices of raw food items climbed by 15.64 per cent during the week ended September 12 year-on-year, driven mainly by a 44.85 per cent rise in vegetable prices.

Among vegetables, potatoes turned costlier by 75 per cent, pulses by 21 per cent and rice by 17 per cent.

Processed food items continued their rising trend. Their prices were up 12.68 per cent on yearly basis as sugar turned dearer by 43.35 per cent.

However, when seen from a weekly perspective, price rise in essential food items did not appear that sharp except for fresh water fish that was up 11 per cent. Other food items rose in the range of one to two per cent or saw a decline.

The rise in inflation for the week comes despite a high base of 12.42 per cent a year ago.

Although inflation at 0.37 per cent does not seem too high as the rate of price rise is measured only on a yearly basis in India, the inflation has already crossed the psychologically important 5-per cent mark for this fiscal so far.

The inflation this fiscal was at 6.12 per cent, marginally down from 6.62 per cent a year ago.

However, analysts said surging prices should not prompt RBI to signal hike in interest rates as the step would not help arrest inflation, but would instead retard growth.

Finance Minister Pranab Mukherjee has already said he is not in favour of tight monetary policy till significant signs of recovery in the global economy are evident.

Crisil Principal Economist D.K. Joshi said, “RBI is likely to maintain neutral stance in its second quarterly review of the credit policy. The central bank would tinker with the policy rates only when demand side constraints are visible like pick in credit offtake, increase in manufacturing prices and other factors.”

The 52-week average inflation till September 12 stood at 3.22 per cent. While the average for primary articles (found in raw form) stood at 8.37 per cent, for fuel at negative 3.09 per cent and for manufactured items at 3.58 per cent.

Though the figures reflect a skewed distribution of inflation towards food prices, it is not reflected in the weekly overall inflation as primary food articles have only 22 per cent weightage in it.

In consumer price inflation, where food prices have a weight between 50 and 60 per cent, inflation is already in double digits, as per various indices.

Within wholesale price inflation, there are, however, a number of items like edible oils, fibres, minerals, fuels, gas, petrol, man-made textiles, leather and leather products, iron and steel, machine tools and transport equipment whose prices declined during the week on yearly basis.

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