Inflation rises to 4.24%

Surge in prices of fruits, vegetables, edible oil and other food items, industrial fuels and manufactured products pushed up inflation to 4.24 per cent during the week ended October 1 from 3.97 per cent a week ago.

The delayed impact of fuel price hike, festival demand and seasonal factors were responsible for higher inflation of over 4 per cent for the week, compared with 7.15 per cent a year ago.

With the base-year effect subsiding, wholesale prices have started increasing since last month. Wholesale price index rose by 0.2 per cent to 196.9 points during the week, from 196.5 a week ago and 188.9 a year ago.

"Around October last year, inflation started decreasing, leading to a lower base from which inflation for the current year is calculated. The lower base is also responsible for the increase in inflation this week. Oil prices have also pushed up inflation," said DK Joshi, senior economist, Crisil.

Chief Economic Advisor AK Lahiri said inflation continued to be moderate. The government and the Reserve Bank of India would strive to keep prices under check as inflation was not good for the economy, he added. Asked if inflation would be in line with the RBI's 5-5.5 per cent projection, he said, "I hope it will be lower."

The weight of primary articles was 22 per cent in the wholesale price index (WPI) and that of oil prices was 14 per cent, thus, contributing 50 per cent to the increase in inflation, added Joshi.

The rise in domestic inflation coincided with high global crude prices at about $67 due to fears of refinery shut down in the US and France in September-end.

The government revised the inflation figure to 3.78 per cent for the week ended August 6, from provisional 3.35 per cent, while the WPI stood corrected at 194.9 points against the earlier estimate of 194.1 points.

The food article group index rose to 197.1 as fruits and vegetables became costlier by 4 per cent with an increase in the prices for arhar, bajra and eggs. The non-food articles' index rose to 181.4 points as prices rose for safflower kardi seed, mesta and groundnut seed.

The index for leather and leather products rose by 2.5 per cent to 170.4 as western-type footwear became costlier by 3 per cent. Analysts expect the rising trend in inflation to continue till it reaches the 6-per cent-mark.