Headline inflation inched closer to the double-digit mark in August, rising to 9.78% on the back of soaring prices of food and manufactured products, which may prompt the RBI to continue with its monetary tightening policy.
Overall inflation, as measured by the Wholesale Price Index (WPI), stood at 9.22% in July. The rate of price rise stood at 8.87% in August, 2010.
As per data released by the government today, the overall inflation figure for June this year has been revised upward to 9.51% from the provisional estimate of 9.44%.
On an annual basis, food items became 9.62% more expensive during the month under review. Onions grew 45.29% costlier, while fruit prices were up 22.82% and the rates for potatoes rose by 12.53%.
Overall, vegetable prices witnessed 11.80% inflation during August, 2011.
Inflation in overall primary articles, which have a share of over 20% in the WPI basket, stood at 12.58% in the month under review.
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Non-food primary articles, which include fibres, oil seeds and minerals, became dearer by 17.75%.
Prices of manufactured products, which have a weight of around 65% in the WPI basket, went up by 7.79% year-on-year in August.
Inflation in manufactured products has been steadily rising since February this year, when it crossed the 6%-mark.
Among manufactured items, edible oil became dearer by 12.94%, tobacco product prices rose by 13.17%, cotton textiles grew 16.86% more expensive and wood and wood products were 9.72% costlier year-on-year.
In addition, iron and semis grew dearer by over 20%, while prices of basic metal alloys rose by 11.56% during August, 2011.
Inflation in the fuel and power segment stood at 12.84% year-on-year in the month under review, as per the index.
This is the ninth consecutive month when headline inflation has been above the 9%-mark.
The jump in inflation to close to double digits is likely to put pressure on the Reserve Bank to continue with its policy of monetary tightening, according to experts.
The apex bank has already hiked key policy rates 11 times since March, 2010, to tame inflation. The bank's next mid-quarterly policy review is scheduled for September 16.
India Inc has said the string of rate hikes, which have raised the cost of borrowing, have acted as a dampener to fresh investment and hindered growth.
Industrial production plunged to a 21-month low of 3.3% in July. Meanwhile, economic growth during the April-June period stood at 7.7%, the slowest expansion rate in the past six quarters.
Both the government and the RBI have projected headline inflation to remain elevated till the third half of the current fiscal, mainly on account of pressure from international commodity prices.