Wholesale inflation rises to six-month high of 3.6% in Oct

Tribune News Service

New Delhi, November 14

The sharper-than-expected spike in wholesale inflation to a six-month high of 3.6% in October has increased chances of a pause in the monetary policy review.

Wholesale level rose to six-month high of 3.59% in October as the prices of food articles, led by onions and vegetables, rose sharply. Inflation, based on the Wholesale Price Index (WPI), was 2.60% in September.

The government said it expects the spike in inflation due to rising prices of vegetables to remain seasonal in nature. Subhash Chandra Garg, Economic Affairs Secretary tweeted, “Hopefully, increasing trend proves to be seasonal and we will continue to have sub-4% inflation”.

Aditi Nayar, Principal Economist, ICRA, said the spike in WPI inflation was broad-based, led by vegetables, fruit, crude oil, natural gas, fuels, minerals and electricity.

“The sharper-than-anticipated uptick in the WPI inflation reinforces our expectation of a status quo in the upcoming monetary policy review”, Nayar said.

FICCI said under the present scenario inflation targeting by the central bank may not be the best approach. “The manufacturing sector is showing signs of recovery and it is important to support this improvement through all policy levers. The high real interest rates remain a challenge for the industry”, said Pankaj Patel, Ficci president.