New Delhi: Inflation based on the Wholesale Price Index (WPI) accelerated to an eight-month high of 3.93% in November, from 3.59% in October, adding to the string of worrisome economic data released this month.

Data released earlier this week showed that retail inflation unexpectedly jumped to a 15-month high of 4.88% in November, and industrial production slowed to 2.2% in October.

WPI-based inflation rose mainly on account of a sharp increase in fuel and food prices, according to data released by the commerce ministry. While fuel price index rose by 8.8%, food prices index rose 6.06%. The increase in food prices was led by the sharp rise in vegetable prices that rose by 60% mainly due to soaring onion prices.

All three components of the fuel price index—liquefied petroleum gas, petrol and high speed diesel—rose sharply during the month. Manufactured products inflation was at 2.6% led by price rise in tobacco, basic metals, apparel, cement and paper products.

Economists point out that the sharp increase in the inflation indices justify the cautious tone of the Reserve Bank of India in its statement on last week’s monetary policy which kept interest rates unchanged. Care Ratings, in a note on Thursday, pointed out that upside risks to inflation could emerge if crude oil prices increase with Opec member countries looking to curb oil production or if rabi crop output is lower than last year.

“Going forward, we expect wholesale inflation to be around 3.5-4% by the end of the fiscal year," the note said.

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