Inflation up at 1.34 pc in Oct, may prompt RBI to up rates

New Delhi, Nov 14 (PTI) Inflation more than doubled in a
month to 1.34 per cent in October despite cheaper food prices,
which analysts see would strengthen the case for Reserve Bank
to tighten money supply.
Strong showing by the industry in September has already
added fuel to the debate for withdrawing fiscal stimulus.
Inflation was 0.5 per cent in September, according to
data from the government, which has switched to the monthly
mode for measuring rise in wholesale prices.
Among food items, vegetable prices declined considerably
to 16.43 per cent from September level, but figures of the
actual decline were not available. But onions and potato
prices rose 29.88 per cent and 11.18 per cent, respectively.
On a yearly basis, prices of potato have doubled since
October last year, while onions were expensive by 37 per cent.
With RBI expecting inflation to touch 6.5 per cent by the
end of this fiscal, analysts believe the central bank might go
full steam on ending its easy monetary policy, given the
upswing in industrial growth and global recovery.
"I expect CRR (Cash Reserve Ratio) hike by 25 basis
points in January policy. There could be some action on policy
rates," said HDFC Bank Economist Jyotinder Kaur.
With industrial production up by 9.1 per cent in
September, after close to 11 per cent expansion in August, RBI
might not have to think twice, analysts said.
The central bank had already announced the first phase of
the 'exit' from its easy money policy when it reviewed its
monetary stance in October. PTI