India's WPI rose to 8.56% as food items such as sugar, potatoes and pulses turned costlier. In January, sugar prices rose by 59% compared with last year

Wholesale price-based inflation rose to 8.56% in January, shooting past the Reserve Bank of India (RBI)'s forecast of 8.5% for this fiscal end, as food items such as sugar, potatoes and pulses turned costlier. Overall inflation in December was 7.31%.

In January, sugar prices rose by 59% year-on-year (y-o-y) while potatoes turned costlier by 53.4% and pulses by 45.6%. On a monthly basis, prices of masur increased by 9%, arhar by 6% and wheat by 4%.

The fuel index rose by 1.8% due to higher prices of naphtha that rose 21%. Furnace oil rose 6% while bitumen, non-coking coal and light diesel oil rose 3% each.

To tame inflation, the RBI, in its quarterly monetary review, had asked banks to keep aside more cash with them. It hiked the cash reserve ratio—the amount banks have to park with the apex bank—by 75 basis points to 5.75%, which would mop up Rs36,000 crore from the system.

The RBI has also raised the inflation projection to 8.5% by this fiscal-end from 6.5%.