Wholesale price inflation rose to a four month high in August on the back of soaring food and fuel prices, dampening hopes of any interest rate cut by the RBI when it reviews monetary policy in October.
Inflation, as measured by the wholesale price index, rose an annual 3.24%, higher than previous month's 1.9% and above 1.1% recorded in the same month last year. The government kept the June inflation rate unchanged at 0.9%.
The WPI inflation data mirrored the retail inflation number, which hit a five month high of 3.4% in August largely driven by food and housing prices.
While both retail and wholesale price inflation numbers are below the central bank's comfort level the rising inflationary pressures may prompt the RBI to hold interest rates for now.
Economists said they expect the central bank to hold rates in the October review.