Higher vegetable, edible oil prices drive inflation to 10.79%

Rising for the fourth consecutive month, retail inflation remained in double digits at 10.79 per cent in January, driven by higher prices of vegetables, edible oil, cereals and protein-based items.

The retail inflation had stood at 10.56 per cent in December, 9.90 per cent in November and 9.75 per cent in October, 2012.

The vegetables basket in January recorded the highest inflation of 26.11 per cent among all the constituents that make the Consumer Price Index (CPI), according to data released on Tuesday.

Vegetables were followed by the oil and fats segment at 14.98 per cent. Meat, fish and egg became 13.73 per cent more expensive during the month.

While, cereals and pulses became dearer by 14.90 per cent and 12.76 per cent respectively on an annual basis, sugar turned more expensive by 12.95 per cent.

Clothing and footwear witnessed 11 per cent increase in prices during the month.

In urban areas, retail inflation rose to 10.73 per cent in January from 10.42 per cent in the previous month. The CPI for rural population increased to 10.88 per cent during the month from 10.74 per cent in December.

The data for wholesale price index (WPI)-based inflation is expected on Thursday. The WPI figures for December stood at 7.24 per cent, much higher than RBI's comfort level of 5-6 per cent.

The Reserve Bank of India (RBI) in its monetary policy last month had slashed its key interest rates by 0.25 per cent and released Rs 18,000 crore (Rs 180 billion) additional liquidity into the system to perk up growth through reduced cost of borrowing.

The RBI has forecast the March end WPI inflation at 6.8 per cent.

Meanwhile, industrial output growth rate contracted by 0.6 per cent in December, 2012, compared to a growth of 2.7 per cent in same month a year ago. 

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