New Delhi: The wholesale price-based inflation rose to an eight-month high of 1.48% in October, as manufactured products turned costlier, with experts saying that the Reserve Bank of India will keep interest rates on hold in its policy review next month.
The WPI inflation was at 1.32% in September and 0% in October last year.
This is the highest level of wholesale price index-based (WPI) inflation since February, when it was at 2.26%.
While food article prices softened in October, manufactured items witnessed hardening of prices, according to the data released by the Commerce and Industry Ministry.
Food inflation in October stood at 6.37%, against 8.17% in the previous month.
The rate of price rise in vegetables and potato remained high at 25.23% and 107.70%, respectively, during the month.
Inflation in manufactured products category stood at 2.12% in October, as against 1.61% in September. Fuel and power basket witnessed softening to (-)10.95% in October.
The retail inflation, based on consumer price index, was at a six-year high of 7.61% in October, data released last week showed.
ICRA Principal Economist Aditi Nayar said core inflation spiked to 1.7% in October 2020 from 1% in September, and the core index has been hardening since August.
India Ratings and Research Chief Economist D K Pant said the increase in core inflation suggests improvement in demand conditions after lifting of COVID-19 lockdown.
"However, it will be too early to term this as a general recovery, a large part of this is due to festival related demand," Pant said.
"Rising retail food inflation and declined wholesale food inflation is a nightmare for policy makers. India Ratings expects demand...to improve further, however, bigger question is whether increased demand will be sustained after festive season," Pant added.
The RBI is scheduled to review policy interest rate on December 2-4.
The RBI in a report on the state of economy last week had also flagged unrelenting pressure of inflation as a downside risk confronting the prospects of economic recovery.
"The foremost is the unrelenting pressure of inflation, with no signs of waning in spite of supply management measures...There is a grave risk of generalisation of price pressures, unanchoring of inflation expectations feeding into a loss of credibility in policy interventions and the eventual corrosion of the nascent growth impulses that are making their appearance," RBI had said.