Inflation close to double-digit; more RBI interest hikes likely

Inflation increased to 9.72 per cent in September from 8.98 per cent a year ago, raising prospects of yet another interest rate hike by Reserve Bank later this month.

Prices of almost all the items, including food and manufactured products, went up significantly.

However, the general inflation, measured by Wholesale Price Index (WPI) was marginally lower than 9.78 per cent in August.

This is for the tenth consecutive month when the rate of price rise has stayed above 9 per cent.

"If inflation goes up, interest rates will go up anywhere in the world... I have no other (monetary policy) instrument available with me (to anchor inflationary expectations)," RBI Deputy Governor K C Chakrabarty said here.

Food items became 9.23 per cent expensive year-on-year in September. Onions became 23.58 per cent costlier, fruit were up 15.98 per cent and potatoes rose by 14.64 per cent. Overall, vegetable prices witnessed 14.04 per cent inflation.

Prices of manufactured products, which have a weight of around 65 per cent in WPI basket, went up by 7.69 per cent.

Inflation in June this year also stood revised to 9.36 per cent from the provisional figure 9.22 per cent, as per the data released today.

"It is not a very comfortable situation. For the monetary policy stance to change, inflation has to come down and show signs of definite decline. But that kind of an indication has not come...," Chairman of the Prime Minister's Economic Advisory Council C Rangarajan said.

After raising interest by 3.50 percentage points since March,2010 the RBI is scheduled to review the rates again on October 25.