Higher prices of food and fuel products drove inflation based on wholesale price index (WPI) to a four-month high of 3.24% in August even as experts said the rise is in expected lines.
The last such high level of inflation was witnessed in April when the rate of price rise was 3.85 per cent.
The index for Fuel & Power group rose by 0.9 percent to 89.2 (provisional) from 88.4 (provisional) for the previous month.
Prices of other major group under the WPI - manufactured products - which comprise almost 64.23 per cent of the index, rose by 2.45 per cent.
The government data released today showed that prices of food articles went up by 5.75 percent in August on a yearly basis, as against 2.15 percent in July.
The official WPI for all commodities (Base: 2011-12 = 100) for the month of August, 2017 rose by 0.8 per cent to 114.8 from 113.9 for the previous month, according to the provisional data released by the Office of the Economic Adviser, ministry of commerce and industry.
The RBI said it will endeavour to keep retail inflation close to 4 percent but in the near term, there might be some uptick on account of pay commission payouts and price adjustments post GST rollout from July 1. Food inflation came in at 4.41 percent as against 2.15 percent month-on-month.
While index for "Non-Food Articles" group grew by 1.8% to 120.6 from 118.5 for the previous month due to higher price of floriculture (25%), copra (coconut) (23%), guar seed (8%), safflower (kardi seed) (4%), castor seed (3%), gingelly seed, rape & mustard seed and raw wool (2% each) and soyabean and skins (raw) (1% each).
Product-wise, the price of high-speed diesel rose by 20.30 per cent during August, while that for petrol climbed by 24.55 per cent, and for LPG by 5.33 per cent. Rising inflation will mean lesser room for the Reserve Bank of India to cut lending rates to revive anaemic industrial growth that stood at 1.2% in July.
"There have been such episodes in the past and we need to double up our efforts to boost agri-production as well as improve the distribution and supply chains".