India's wholesale price index increased by 3.59 percent on the year in October, accelerating from 2.60 percent in September and the highest level since April. The index advanced 1.05 percent on the month in October after dropping 0.44 percent in September. Consumer price index data published earlier in the week also showed an increase in headline inflation from 3.28 percent in September to 3.58 percent in October, closer to the mid-point of the Reserve Bank of India's target range of 2.0 percent to 6.0 percent..
Similar to the increase in CPI inflation, the increase in WPI inflation in October was partly driven by vegetable prices. Food prices, which account for around 15 percent of the index, increased by 4.30 percent on the year in October, up from 2.04 percent in September, with year-on-year growth in vegetable prices accelerating sharply from 15.48 percent to 36.61 percent. The year-on-year increase in fuel and power prices (around 13 percent of the index) also increased from 9.01 percent to 10.52 percent, though inflation for manufactured products (around 64 percent of the total index) eased slightly from 2.72 percent in September to 2.62 percent in October.
The increase in headline WPI and CPI inflation in October is in line with officials' view that price pressures are likely to build in the near-term. At its most recent policy review, held early October, the RBI kept policy rates on hold but revised up its forecasts for headline CPI inflation in the current fiscal year, reflecting factors such as the newly-introduced goods and services tax and higher global oil prices.