Inflation in non-food items surged sharply to clock a 20 per cent annual rise in the week ended August 27, up from the 17 per cent increase reported in the previous week.
Non-food inflation trending higher could mean more bad news for the manufacturing sector, as it signifies an upward pressure on input prices. The sector is already reeling under the effects of continuous monetary tightening and the resultant downturn in the broader economy.
Non-food articles
According to latest Government data, based on the annual WPI-based estimates, non-food articles across the three main subgroups — fibres, oilseeds and minerals — recorded a surge in year-on-year inflation. Sequentially too, items such as raw rubber (3 per cent), silk (2 per cent) and raw cotton (1 per cent) inched up. The index for the non-food articles group rose 1.1 per cent on a week-on-week basis.
Food inflation, though, eased into single digits to clock a 9.55 per cent year-on-year rise, from 10.05 per cent in the previous week. Onions, fruits and poultry items showed signs of moderation in price levels during the week.
Despite the dip, food inflation continued to stay above 9 per cent for the fifth straight week, maintaining the pressure on the central bank to raise interest rates further. While vegetable prices are broadly expected to remain firm in the coming weeks, analysts expect the inflation rate for vegetables to possibly decline on account of the base effect. Fuels surged 12.55 per cent during the latest reported week, the same level of increase recorded in the previous week. RBI is slated to announce the next decision on interest rates on September 16.
According to the latest data, onions were up 42 per cent on an annual basis, while potatoes surged over 13 per cent. Fruits (17 per cent) and vegetables (22 per cent) kept up the pressure on the food inflation estimate. Eggs, meat and fish were up 7 per cent, while milk and cereals surged by 9 per cent and 5 per cent, respectively.