Wholesale inflation rose to six month high of 3.59 percent in October as prices of food articles, led by onion and vegetables, witnessed a sharp rise.
The consumer prices index held steady at three per cent in October, figures by the Office for National Statistics (ONS) showed, after rising by its most in more than five years in September.
Meanwhile following the latest inflation data, "there was a very slight initial drop in the value of sterling as markets anticipate that inflation may not peak beyond 3.0 percent and future interest rate rises may not therefore need to be imminent", Richard Stone, chief executive at stockbrokers The Share Centre, said in a note to clients.
Other notable categories such as cereals became dearer by 3.68 per cent and meat and fish recorded a rise of 3.12 per cent.
A study of government data suggests that the retail inflation would have been much higher if the price of pulses had not fallen by 23 per cent on account of bumper crop this year.
"This would be driven by lower food and beverage (chocolate, condensed milk and fish), household goods (detergent, sanitary ware and glassware) and personal care (shaving products, shampoos and cosmetics) prices", it added. However, fruits were comparably cheaper in October on sequential basis.
According to data from the Ministry of Commerce and Industry released on Tuesday, the WPI with revised base year of 2011-12 went up in October to 3.59 per cent from 2.60 per cent in September. It was (-) 22.51 per cent in September. Inflation in rural areas was 3.4%, while in urban centres it stood at 3.8%.
All eyes will be on the current fiscal's sixth bi-monthly meeting of the Monetary Policy Committee, headed by RBI Governor Urjit Patel, on December 5-6.
Some analysts expect the GST Council's decision on Friday to slash tax rates on 178 items to 18 per cent from 28 per cent could marginally lower retail inflation in coming months.