New Delhi: Food and fuel inflation accelerated in mid September, indicating persistently high inflationary pressures in the economy which may prompt the Reserve Bank of India (RBI) to continue to tighten rates.
Food inflation accelerated on higher prices of pulses, eggs, meat and fish while fuel inflation also quickened because of higher prices of petrol and other deregulated fuels like aviation turbine fuel and naptha.
The food price index rose 9.13% and the fuel price index climbed 14.69% in the year to 17 September, government data on Thursday showed, the highest in more than a year.
In the previous week, annual food and fuel inflation stood at 8.84% and 13.96%, respectively.
Fish market in New Delhi. Photo: Bloomberg
The primary articles index was up 11.43%, compared with an annual rise of 12.17% a week earlier.
The benchmark 10-year bond yield rose 1 basis point to 8.35% after the food and fuel price data were released.
“The rise in the weekly food and fuel price numbers suggests that inflation is still sticky but for bond yields, the monetary policy stance would matter the most,” said Vivek Rajpal, a fixed income strategist with Nomura in Mumbai.
A top adviser to the Prime Minister, C.Rangarajan, said on Thursday that supply side measures are needed to moderate food inflation.
The RBI has raised interest rates a dozen times in the past 18 months, but headline inflation WPI (wholesale price index) remains at more than twice the bank’s comfort level, confounding expectations that it was coming to the end of its tightening cycle.
The Reserve Bank of India lifted its policy lending rate, the repo rate, by 25 basis points to 8.25% this month, in line with expectations, in a campaign that has done more to slow growth than contain near double-digit inflation.
WPI-based inflation in August accelerated to 9.78%, its highest in more than a year, from 9.22% recorded for July.