Higher food prices push inflation to seven-month high of 6.46 per cent

Sujay Mehdudia
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Headline inflation touched a seven-month high of 6.46 per cent in September, riding on the back of a whopping 323 per cent increase in the price of onions, followed by an all-round hike in the prices of other fruits and vegetables.

Inflation, based on the wholesale price index (WPI), was at 6.1 per cent in August and 5.85 per cent in July. The latest data released by the government on Monday put the food inflation at 18.40 per cent in September over the same month last year. The onion prices jumped by 323 per cent year-on-year in September. Prices of vegetables in general rose by 89.37 per cent, making life difficult for the common man. Fruits too were costlier by 13.54 per cent year-on-year during the month.

Inflation in liquefied petroleum gas (LPG) and petrol was at nine per cent and 9.64 per cent on annual basis. However, there was a decline in the prices of egg, meat, fish and manufactured food items such as beverages and tobacco products. Overall, inflation in manufactured items showed a moderate increase of 2.03 per cent in the month on annual basis.

RBI is scheduled to unveil its second quarter review of the monetary policy on October 29 and will have to take into account the rising inflation while announcing its steps to boost growth and economic activity.

Last month, worried over the trend of rising inflation, new RBI governor Raghuram Rajan surprised markets by announcing an interest rate hike in his policy review.

Similarly, the annual consumer price inflation quickened more than expected to 9.84 per cent in September from 9.52 per cent in August, government data showed. Food prices for consumers last month rose 11.44 per cent from a year earlier, faster than August’s 11.06 per cent rise.

Reacting to the inflation figures, Planning Commission Deputy Chairman Montek Singh Ahluwalia said it would soften in a month or so and the prices of items like onion had already started showing a downward trend. “I agree inflation is still on the high side, but it will soften in a month or so,’’ he told reporters here.

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