Saturday 11 July 2020

India inflation hits 10-month high

New Delhi, March 8, 2008

India's inflation rate crossed five per cent to hit a 10-month high as fruit, fish and other food prices rose, according to official data yesterday, reducing chances of an early interest rate cut.

Inflation climbed more than a tenth of a percentage point to 5.02 per cent for the week ended February 23 from 4.89 per cent the previous week, according to the wholesale price index, India's most watched cost-of-living monitor.

Inflation is still far below its two-year high of 6.69 per cent hit in January last year. But the new rate breached the central bank's target of close to 5 per cent for this fiscal year ending March 31, this year, and contradicted analysts' expectations that inflation would fall to around 4.8 per cent.

The data also came as unwelcome news for India's Congress-led government which is worried about prices rising with 12 to 15 months to go before the next national election, analysts say.

Inflation in Asia's third largest economy was last above 5pc in the second half of May last year.

The bank has warned that rising global commodity and fuel prices are a worry and has raised interest rates nine times since 2004 to keep prices in check but the monetary tightening has been blamed for slowing India's economic boom.

Analysts say the central bank will remain hawkish on inflation as long as price pressures continue.

Prices of fish, vegetables, fruit, milk and other goods all rose, according to the latest data.

But the inflation index for fuel, power, light and lubricants remained unchanged despite an increase in state-set petrol and diesel prices on February 14 to stem losses at government-owned energy firms.

Wholesale prices stood at 6.02 per cent in the same week a year earlier.

Inflation has been cited as a key factor in several recent state poll drubbings for Congress which largely owes its 2004 general election win to support from India's poor masses who have been hardest hit by price rises.

Prime Minister Manmohan Singh has declared his government's top priority is containing inflation which he called an 'iniquitous tax' that 'hurts the poor more than the rich.'

Tags: India | Food | infaltion | price |


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