India's inflation rate jumped by almost a full percentage point to hit a more than 10-month high, data showed on Thursday, dimming chances of an early interest rate cut to spur a slowing economy.
Annual inflation leapt by 0.81 percentage points to 5.92 per cent for the week ended March 8 from 5.11 per cent the previous week, according to the wholesale price index, India's most watched cost-of-living monitor.
The rise was driven by increases in prices of essential goods such as edible oil, pulses, fruit, vegetables and spices and came as unwelcome news for the Congress-led government, which largely owes its 2004 national election win to support from India's poor masses, who have been hardest hit by inflation.
The new rate, which far exceeded market forecasts of 5.2 per cent, is the highest since late April 2007 when inflation stood at 6.01 per cent and significantly above the central bank's five per cent tolerance level.
The figures came a day after the government imposed a one-year ban on the export of edible oils to curb rising prices.
Commerce Minister Kamal Nath said on Wednesday the government was considering duty cuts on imports of palm oil, saying it was "faced with an uncomfortable situation of rising prices of essential commodities".
Earlier this week, Finance Minister Palaniappan Chidambaram blamed mounting inflation on a "relentless increase" in crude oil, commodity and foodgrain prices in the global market.
Inflation has been on the rise since December and the Prime Minister's Economic Advisory Council Chairman C Rangarajan said on Tuesday that price pressures did not favour an early cut in interest rates.
Nine interest rate hikes since 2004 have pushed borrowing costs to near-decade highs, hitting consumer demand and industrial growth. (AFP)
Indian inflation leaps to nearly 6%