Rise in cost of sugar, pulses and some vegetables that were in short supply pushed inflation in November to 4.78%, up three-fold from October level, souring investor sentiments in the stock market.
The wholesale price-based inflation jumped to nearly 5% from 1.34% in October, according to the monthly inflation datareleased today.
"Inflation has risen high mainly because the food article prices have gone up," finance minister Pranab Mukherjee told reporters here.
Although finance secretary Ashok Chawla said the numbers were nothing surprising, the market benchmark Sensex pared early gains to settle 21.48 points down at 17,097.55.
The monthly data, which was released by the government for the second time, shows that potato prices surged by a whopping 141% in the past eight months, followed by sugar 37%, pulses 32% and onion 20%.
Suresh Tendulkar, former chairman of the Prime Minister's Economic Advisory Council (PMEAC), said that the Reserve Bank could take steps to withdraw liquidity to tame rising prices. The apex bank is slated to announce review of its annual credit policy next month.
Food inflation, according the weekly data announced earlier, was 19.04% in the fourth week of November, the highest in over a decade.
On the other hand, minerals, edible oils and leather products have become cheaper since March 2009. The RBI in its monetary policy review in October revised the inflation forecast to 6.5% by March-end from 5% earlier.
Mukherjee said that rise was more evident in the Consumer Price Index (CPI) than in the Wholesale Price Index (WPI) as "food items have higher weightage" in the CPI.
Food articles have a weightage of about 43 to 48% in the CPI, the minister added.
CPI-based inflation for industrial workers rose by 11.49% in October, up from 11.64% a month ago.
"It is not as if we are taken by surprise or that there is any cause for any special emergency measure at this stage," Chawla said.
Rising prices of commodities has always been a matter of concern for the government, he said, adding the government has been taking administrative steps to contain inflation.
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