Costlier diesel fuelled inflation to 10-month high of 7.81 per cent in September and may limit the scope of the Reserve Bank of India [RBI] to cut interest rates to boost growth.
On 13 September, the government had raised the diesel price by over Rs 5 a litre, which has pushed up the inflation of 'fuel and power' category to 11.88 per cent, from 8.32 per cent in August. With regard to diesel, inflation for the segment rose by 8.94 per cent, from 0.36 per cent in the previous month.
Inflation, as measured by the Wholesale Price Index [WPI], was 7.55 per cent in August. This is the fastest pace of price rise since November 2011, when inflation was 9.46 per cent.
The rise in inflation would restrict RBI's scope of easing policy rates in its second quarter review on 30 October as demanded by India Inc. to kick-start the investment cycle.
The chairperson of the Prime Minister's Economic Advisory Panel C Rangarajan expressed confidence that inflation would decline going forward, but the current situation is not favourable for the RBI to go in for a rate cut. 'When inflation continues to rise, it becomes a very difficult situation. ...I am only saying that the circumstances are not too favourable [for rate cut],' he said.
In the food articles category, wheat turned expensive by 18.63 per cent and cereals by 14.18 per cent on an annual basis. Also potatoes turned dearer by 52.20 per cent and rice by 12.41 per cent during September.
Inflation for July was revised upwards to 7.52 per cent, from 6.87 per cent as per provisional estimates.
On 13 September, the government had raised the diesel price by over Rs 5 a litre, which has pushed up the inflation of 'fuel and power' category to 11.88 per cent, from 8.32 per cent in August. With regard to diesel, inflation for the segment rose by 8.94 per cent, from 0.36 per cent in the previous month.
Inflation, as measured by the Wholesale Price Index [WPI], was 7.55 per cent in August. This is the fastest pace of price rise since November 2011, when inflation was 9.46 per cent.
The rise in inflation would restrict RBI's scope of easing policy rates in its second quarter review on 30 October as demanded by India Inc. to kick-start the investment cycle.
The chairperson of the Prime Minister's Economic Advisory Panel C Rangarajan expressed confidence that inflation would decline going forward, but the current situation is not favourable for the RBI to go in for a rate cut. 'When inflation continues to rise, it becomes a very difficult situation. ...I am only saying that the circumstances are not too favourable [for rate cut],' he said.
In the food articles category, wheat turned expensive by 18.63 per cent and cereals by 14.18 per cent on an annual basis. Also potatoes turned dearer by 52.20 per cent and rice by 12.41 per cent during September.
Inflation for July was revised upwards to 7.52 per cent, from 6.87 per cent as per provisional estimates.