statesman news service
NEW DELHI, 16 September
Dearer vegetables, especially onions that cost 245 per cent more year-on-year, pushed the country’s headline inflation to a six month high of 6.1 per cent in August, prompting experts to predict that the development is likely to restrict the scope of the RBI governor Mr Raghuram Rajan to cut interest rates in his maiden announcement of the apex bank’s policy review on 20 September.
Driving the rising inflation in the main was the food inflation that soared to a three-year high of 18.18 per cent in August, according to official data released here today.
The higher inflation poured cold water on the hopes of markets that the RBI governor would be looking to ease tough measures taken earlier in a bid to arrest a sharp fall in the rupee since May. The RBI&’s moves included draining liquidity from the banking system.
The headline inflation, measured in terms of the Wholesale Price Index (WPI), accelerated to 6.1 per cent in August as against 5.79 per cent in July.
Inflation was recorded at 8.01 per cent during the corresponding month of the previous year. 
Prices of vegetables almost doubled. Onion price soared by 244.62 percent year-on-year.
Eggs, meat and fish became costlier by 18.86 percent. Rice became costlier by 20.13 per cent. Wheat price jumped by 7.6 per cent and prices of cereals soared by 14.35 per cent.
The headline inflation data for June was revised upward to 5.16 per cent from 4.86 per cent reported earlier.
In August, there was a sharp increase in fuel and power and primary articles prices also. Primary articles inflation soared to 11.72 per cent. Fuel and power inflation jumped to 11.34 per cent.
In case of manufactured items, sugar and edible oils became cheaper by 4.2 per cent and 3.86 per cent respectively.
Overall, manufactured items showed a moderate increase of 1.9 per cent during the month on an annual basis. 
“Over the next few months food inflation will start coming down because of good monsoon and that would have an impact on the rest of the things.
“We expect inflation by the end of the current fiscal to be around 5.5 per cent,” Prime Minister&’s Economic Advisory Council (PMEAC) chairman Mr C Rangarajan said.

RBI decisions may be influenced
New Delhi, 16 September: On a day when the country’s headline inflation rose to a six month high of 6.1 per cent, mainly on account of costlier vegetables, the Prime Minister’s Economic Advisory Council (PMEAC) said inflation and forex market conditions are likely to influence the Reserve Bank decisions as it reviews monetary policy later this week.
“All that I can say is that the RBI, I believe, will take into account the behaviour of inflation as well as what is happening in the foreign exchange market and take a decision,” PMEAC chairman Mr C Rangarajan said here today.     sns