Inflation rose higher than expected to 0.37 per cent for the week ended September 12 from 0.12 per cent in the previous week due to rising food prices. While supply shortages pushed up food prices by an annual 15.6 per cent, a recent uptick in prices for base metals and manufactured goods hinted at resurgent demand-driven pressures that may compel RBI to accelerate efforts to begin taming inflation. The inflation rate is expected to rise rapidly in coming weeks as the impact of sharp increases in fuel and commodity prices last year drops out of annual calculations. The wholesale price index (WPI) based inflation is already 6.1 per cent higher than on March 28, the last reading of the 2008-09 fiscal year.

RBI governor Duvvuri Subbarao earlier this month said the central bank would not unwind its accommodative monetary policy before ensuring recovery. He also said the economy faced supply constraints rather than excessive demand. Finance minister Pranab Mukherjee too has said he is not in favour of a tight monetary policy till significant signs of recovery in the global economy are evident. Last week, RBI deputy governor KC Chakrabarty said inflation could hit 6 per cent by the end of the fiscal year, above the central bank’s July of about 5 per cent.