Inflation rises to 1.34% in Oct

Increase In Costlier Food Items; Urgency Of Monetary Tightening Needed To Sustain Economic Recovery Our Bureau NEW DELHI      ANNUAL inflation went up sharply in October to 1.34% from 0.5% a month earlier due to costlier food items, the data released on the new monthly wholesale price index released on Saturday. The accelerating inflation is expected to impart more urgency to monetary tightening if the economic recovery sustains.      Prices of key food items including wheat, rice and moong dal increased during the course of the month, though there was some let up in the prices of fruits and vegetables, which dropped a steep 11% during the course of the month.      The built up inflation in the current year, or the increase in prices from the beginning of the current fiscal to end of October, has been strong at 6.13% against 5.99% in the corresponding prettied last year.      Minerals and industrial fuels were up  3% each during the month while prices of manufactured products remained largely unchanged.      In a new system of reporting wholesale price index (WPI)-based inflation, the entire index will be reported only once a month now against every week earlier. However, the government will continue to report the index number for primary articles and fuels every week. This is expected to improve data quality, as more time will be available for collecting and validating data. The base year for the index, however, remains 1993-94.      The government is likely to announce a revamped wholesale price index from the next fiscal. The new index will have a larger and more current product basket and 2004-05 as the base year, making it more      relevant for policymakers.      WPI is the most widely watched measure of inflation in India. Heightened inflation concerns have seen the Reserve Bank of India (RBI) hike its end March 2010 inflation estimate to 6.5% against 5% earlier. It had, however, not hiked interest rates, choosing instead to tighten credit to select escorts and remove the liquidity support allowed at the time of the liquidity crisis.      Food prices have gone up sharply because of the poor monsoons, which has affected the production of both foodgrains and vegetables. Production of foodgrains is expected to drop 15 million tonnes in the current kharif season.      However, late monsoon rains have improved the prospects for the Rabi crop, which should help bring down prices of food articles.