India’s Food Inflation Rate Exceeds 9% for Third Straight Week
India’s food inflation rate exceeded 9 percent for a third straight week, sustaining pressure on the central bank to maintain its tight monetary policy stance.
An index measuring wholesale prices of agricultural products gained 9.32 percent in the week ended Oct. 1 from a year earlier, the commerce ministry said in a statement in New Delhi today. It rose 9.41 percent the previous week.
India’s inflation needs to ease before interest rates can be cut, central bank Governor Duvvuri Subbarao said yesterday as he called for higher supplies. India’s June-September monsoon rainfall, the main source of irrigation in the country, was 1 percent above average this year, according to the weather office, boosting farm prospects.
“There is no doubt inflation still remains a concern,” said Dharmakirti Joshi, a Mumbai-based economist at Crisil Ltd., the local unit of Standard & Poor’s. He expects the central bank to boost its repurchase rate by a quarter of a percentage point to 8.5 percent in the next policy decision on Oct. 25.
The yield on the 7.8 percent government bond due April 2021 was unchanged at 8.73 percent at 12:36 p.m. in Mumbai. The BSE India Sensitive Index rose 0.2 percent, and the rupee was little changed at 48.97 against the dollar.
In the week ended Oct. 1, food inflation slowed as onion costs dropped 10.2 percent from a year earlier, today’s report showed. Prices of wheat fell 0.2 percent.
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