Inflation rises to 8.43%; case for RBI to hike rates

Inflation shot up to 8.43% in December, from 7.48% in the previous month, as prices of certain food and non-food items continued to show an upward trend.

After moderating somewhat in November, the overall inflation, measured on the basis of wholesale prices, rose in December as vegetable, like onion, and other protein-based items became expensive.

With the inflation showing no signs of moderation, it is widely expected that the Reserve Bank of India (RBI) will raise the key policy rates during its quarterly monetary policy review on January 25.

For October, the figure has been revised upwards to 9.12% from the provisional number of 8.58%.

It may be recalled, the food inflation, which accounts for over 14% in the overall WPI inflation, has remained high through December and stood at 16.91%.

A worried government yesterday announced a slew of measures to contain price rise including de-hoarding operations and closely monitoring export and import of food items.

As per the WPI data, prices of primary articles -- food, non-food articles and minerals -- shot up by 16.46% on an annual basis, official data released here showed.

However, prices of certain food items declined on an year-on-year.

While wheat became cheaper by 5.09%, pulses fell by 10.89% and potatoes went down by 26.57%.

During the month, fuel and power prices went up by 11.19%, while manufactured goods became expensive by 4.46% on an annual basis.

Manufactured items have the highest weight of 64.9% in the wholesale price index, on the basis of which inflation is calculated.

Within manufactured products, however, sugar prices eased by 9.91% and leather and leather goods by 1.23% on an annual basis