India’s Food Inflation Accelerates to 9.41%, a Three-Week High
An index measuring wholesale prices of agricultural products gained 9.41 percent in the week ended Sept. 24 from a year earlier, the commerce ministry said in a statement in New Delhi today. It rose 9.13 percent the previous week.
Reserve Bank of India Governor Duvvuri Subbarao has to weigh the risks to economic growth posed by Europe’s sovereign- debt crisis and a faltering recovery in the U.S. when he announces the next rate decision on Oct. 25. Higher food costs have contributed in keeping India’s benchmark wholesale-price inflation at more than 9 percent since the start of December.
“Inflationary pressures in India have refused to abate,” Anubhuti Sahay, a Mumbai-based economist at Standard Chartered Plc, said before the report. She expects the central bank to boost its repurchase rate by a quarter of a percentage point to 8.5 percent this month.
The yield on the 8.08 percent securities due August 2022 rose three basis points, or 0.03 percentage point, to 8.68 percent as of 12:32 p.m. in Mumbai. The Bombay Stock Exchange Sensitive Index increased 3.3 percent, and the rupee strengthened 0.5 percent to 49.12 against the dollar.
Food inflation gained as prices of vegetables rose 14.9 percent in the week to Sept. 24 from a year earlier, today’s report showed. It rose 12 percent the previous week. Prices of eggs, meat and fish advanced 10.3 percent and milk costs jumped 10.4 percent, according to the report.
Subbarao has increased the central bank’s repurchase rate 12 times since mid-March 2010 by a total of 350 basis points, the fastest round of increases since the Reserve Bank was established in 1935, Bloomberg data show.
India’s benchmark wholesale-price inflation accelerated to a 13-month high of 9.78 percent in August. The inflation rate remains above the level the central bank deems acceptable, Subbarao said Sept. 26, underscoring that pressure remains for monetary tightening.
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