Wholesale price-based (WPI) inflation rose to 8.56 per cent in January, shooting past the RBI's forecast of 8.5 per cent for this fiscal end, as food items such as sugar, potatoes and pulses turned costlier.
Overall inflation in December was 7.31 per cent.
Sugar prices rose by 58.96 per cent in January year-on-year while potatoes turned costlier by 53.39 per cent and pulses by 45.64 per cent.
On monthly basis, prices of masur increased by 9 per cent, arhar by 6 per cent and wheat by 4 per cent.
Fuel index rose by 1.8 per cent due to higher prices of naphtha that rose 21 per cent. Furnace oil rose 6 per cent while bitumen, non-coking coal and light diesel oil rose 3 per cent each.
To tame inflation, the RBI, in its quarterly monetary review, had asked banks to keep aside more cash with them.
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It hiked the cash reserve ratio--amount banks have to park with the apex bank--by 75 basis points to 5.75 per cent, which would suck out Rs 36,000 crore from the system.
The RBI has also raised the inflation projection to 8.5 per cent by this fiscal-end from 6.5 per cent.