Inflation jumps to 8.43% in Dec; Rate hike likely

Inflation shot up to 8.43 per cent in December from 7.48 per cent in the previous month, as the prices of certain food and non-food items continued to show an upward trend.After moderating somewhat in November, the overall inflation, measured on the basis of wholesale prices, rose in December as vegetables like onion and other protein-based items became expensive.

With the inflation showing no signs of moderation, it is widely expected that the Reserve Bank of India will raise the key policy rates during its quarterly monetary policy review on January 25.For October, the figure has been revised upwards to 9.12 per cent from the provisional number of 8.58 per cent.Earlier, the food inflation, which accounts for over 14 per cent in the overall WPI inflation, has remained high through December and stood at 16.91 per cent.

As per the WPI data, prices of primary articles- food, non-food articles and minerals- shot up by 16.46 per cent on an annual basis, official data released here showed.However, the prices of certain food items declined on a year-on-year basis.

While wheat became cheaper by 5.09 per cent, pulses fell by 10.89 per cent and potatoes went down by 26.57 per cent.During the month, fuel and power prices went up by 11.19 per cent, while manufactured goods became expensive by 4.46 per cent on an annual basis.

Manufactured items have the highest weight of 64.9 per cent in the wholesale price index, on the basis of which inflation is calculated. Within manufactured products, however, sugar prices eased by 9.91 per cent and leather and leather goods by 1.23 per cent on an annual basis.

The Government has announced a slew of measures to contain the price rise including de-hoarding operations and closely monitoring the export and import of food items.