Soaring veggie prices push inflation to a 7-month high Onion Costs Quadrupled In A Year

New Delhi: Inflation accelerated to a seven-month high in September driven by sharp spikes in onion and vegetable prices, official data released on Monday showed. This may prompt the RBI to persist with its tight monetary policy and add to the political pressures facing the UPA as it heads into crucial elections.      The wholesale price index rose an annual 6.46% in September, higher than the previous month's 6.10%. The rate stood at 8.07% during the corresponding month of the previous year.      Onion prices more than quadrupled, rising 323% year-onyear. Other vegetables did not quite reach these astronomical levels, but as a group their prices nearly doubled, up by 90% year-on-year in September.      Overall food inflation hovered around the 18% mark in September as supply pressures continued.      Food inflation as measured by the consumer price index is hovering around the double-digit mark, making it tough for the RBI to ease interest rates. Food prices have stayed high for three years, upsetting household budgets.  In Lasalgaon mkt, onion 20% dearer M umbaikars are unlikely to get a breather from rising onion prices anytime soon, report Tushar Pawar & Bella Jaisinghani. The average wholesale price of onions at Lasalgaon APMC, Asia's biggest market for the bulb, shot up to a high of Rs 5,501 per quintal (Rs 55.01/ kg) on Monday, a near-20% rise over Friday's rate. Market sources blamed the hike on a "decline in supply". They said onion arrivals on Monday had come down to 500 quintals from the usual 8,000 quintals. It's not just the onion that's hurting people, veggies like cauliflower, beans and lady's finger too are pinching hard at Rs 60-80/kg. P 3 'Expect another repo rate hike this month'      The unease over high food prices is likely to be a key election issue in the upcoming state polls and the general elections in 2014. Some of the increase in vegetable prices could be attributed to seasonal fluctuations, but strained supplies have kept overall food prices high. While the government has repeatedly said it is trying to shore up supplies, the situation on the price front remains grim.      High inflation has also acted as a dampener on any moves by the RBI to slash interest rates to boost flagging economic growth, further adding to the potentially adverse political fallout of the economic situation on the ruling coalition.      Separate data showed retail inflation quickened to 9.84% in September from the previous month's 9.52%. Food and beverages inflation, according to the consumer price index, rose 11.44% on an annual basis during the month. The corresponding provisional inflation rates for rural and urban areas for September 2013 were 9.71% and 9.93% respectively. Retail inflation has hovered around the double-digit mark for several months adding to the pressure of households in rural and urban areas.      The government also revised upwards the data for July to 5.85% from the previously reported 5.79%. Some economists said the RBI may raise interest rates again in its upcoming policy review in the face of inflationary pressures confronting the economy. "The pickup in inflation is testament to the lingering inflation risks and underscores the need for the RBI to keep its inflation guards up," said Leif Esekesen, chief economist India & Asean at HSBC.      "As for the RBI, today's numbers suggest that it has to continue to cater inflation risks. There is, consequently, a good chance that the RBI will deliver another repo rate hike at the October monetary policy meeting," Eskesen said. He said WPI inflation rose more than expected due to higher food and core inflation and added that food inflation should eventually ease as supply improves.      Stubborn inflation has remained a policy challenge for the government and has made it difficult for the central bank to take measures to boost growth. Raghuram Rajan, who took over as the new RBI governor in September, surprised markets as he raised the repo rate to 7.5% to calm inflationary pressures. The central bank has consistently cautioned about the stubborn price pressures present in the economy and has resisted calls to ease rates to boost growth.