Inflation rose fastest in six months to 1.51 per cent for the week ended October 17 from 1.21 per cent in the previous week. The wholesale price index-based inflation rose despite a high base year inflation rate of 10.82 per cent during the same week last year. Analysts expect it to touch 7 per cent by March 2010.

While warning of inflationary pressures, especially the food inflation, the Reserve Bank of India (RBI) raised its 2009-10 inflation target to 6.5 per cent from 5 per cent. “RBI’s projection of 6.5 per cent inflation is realistic,” said Crisil principal economist DK Joshi.

Food prices continued to soar on yearly basis. Food stuffs turned costlier by 12.85 per cent, with potato prices soaring by 97.73 per cent, onion 45.26 per cent, sugar 45.73 per cent and pulses 22.92 per cent. The RBI said there are clear signs of rising inflation stemming largely from the supply side, particularly from food prices. Already inflation has risen at the rate of 5.95 per cent so far from the beginning of this fiscal.

Many economists are, however, hopeful about food prices coming down as on weekly basis these have started declining. Food prices declined 0.07 per cent on weekly basis as mainly vegetables and sea fish prices came down. However, some items like cereals and pulses may remain costly.

“Price of primary articles have begun to come off which could be a seasonal phenomenon. Prices of frozen food is likely to remain stable, although cost of cereals, pulses may remain elevated,” Yes Bank chief economist Shubhada Rao said. FE