India’s overall consumer price inflation, which is a more realistic cost-of-living index as it captures shop-end prices, rose to 10.03% in August from 9.86% in July.
Inflation was higher in urban areas (10.19%) as compared to rural India (9.90%).
Rising prices and sliding growth are major worries for the UPA government, already weighed down by a heavy debt burden.The devil of the fresh price indices lies in details.
From the very-essential vegetables, milk, egg and meat to the occasional movie outings and soft drinks, prices of everything have clocked a rise on a year-on-year basis.
Cost of prepared meals – which influences restaurant rates – rose 8.95%, partly because of hiked service taxes and soaring vegetable prices.
Economists claim that costlier diesel at home and extra liquidity from the stimulus measures in the US — also known as the third round of quantitative easing (QE3) — is likely to push up prices further.
“While there are pressures on headline inflation following the recent upward revision in diesel prices and rationalisation of subsidy for LPG, certain other factors such as QE3 will play a crucial role in how inflation pans out in the next quarter,” Deepali Bhargava, chief India economist of research firm Espirito Santo Securities, said.