The Telegraph
Tuesday , November 13 , 2012
Since 1st March, 1999
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Retail inflation close to 10%

New Delhi, Nov. 12: Retail inflation inched up to 9.75 per cent in October from 9.73 per cent a month ago, affirming the Reserve Bank’s concern on prices.

Rising prices of food items such as sugar, pulses and vegetables as well as clothing pushed the consumer price index (CPI) close to double digits.

The spike in sugar prices at 19.61 per cent was the highest on a year-on-year basis. Edible oil became costlier by 17.92 per cent, while pulses were dearer by 14.89 per cent.

Vegetable rates during the month surged 10.74 per cent, while meat, fish and egg prices rose 12.18 per cent.

Clothing and footwear became expensive by 10.47 during the month.

In urban areas, retail inflation moderated to 9.46 per cent in October from 9.72 per cent in the previous month.

CPI for rural population rose to 9.98 per cent from 9.79 per cent in the previous month.

However, the rate of price rise failed to drown out the clamour for rate cuts to spur growth.

“While fully appreciating the imperative of anchoring inflation, the Reserve Bank now needs to intervene and reduce interest rates since a complete sacrifice of growth is not in the interest of the economy,” CII director-general Chandrajit Banerjee said.

Finance minister P. Chidambaram has been advocating rate cuts for quite some time. He had said the monetary policy had certain limitations in reining in inflation and policymakers must learn to live with it.

Last month, the apex bank kept its benchmark rate unchanged but reduced the cash reserve ratio (CRR) by 0.25 per cent to infuse an additional liquidity of Rs 17,500 crore into the financial system.

CRR — which is the portion of deposits banks have to park with the RBI — now stands at 4.25 per cent, while the repo rate, at which the RBI lends to the banks, has been retained at 8 per cent.

The RBI is slated to review the monetary policy next in December but has indicated that a rate cut is “highly improbable” as it expects price pressures to remain elevated following a hike in the price of subsidised diesel in September.