Inflation not yet in control.

In twin blows to Indian economic revival, higher food prices drove retail inflation to a five-month high of 7.4 per cent while factory output fell for the first time in 18 months. This relates to data of september month.

The second consecutive month of rise in consumer price index (CPI)-based inflation will add to the pressure on the Reserve Bank of India (RBI) to again raise interest rates to tame high prices.

Inflation has been above the targeted zone for the ninth month in a row and as per statute, the RBI will now have to explain to the government in writing why it failed to keep prices below 6 per cent.

This is the ninth consecutive month where the inflation print has remained above the upper band of 6 per cent and the second successive quarter where the average is higher than 7 per cent.

Irregular rainfall is said to be the primary reason behind higher inflation in vegetable and fruits. While inflation in cereals has also inched up, the steps taken by the government and a reasonably healthy Kharif output are expected to address the concerns behind the further hike in prices.

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