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29 March 2024

India food inflation returns to double-digits

Published
By AFP

India's food inflation on Thursday returned to double-digits, as prices of vegetables and other staples surged, creating fresh problems for the country's embattled government.

Food inflation climbed to 10.60 percent for the week ending October 8 from the same period a year earlier, according to commerce ministry figures.

The rise was driven higher vegetable costs which soared 17.6 percent year-on-year while fruit prices were up more than 12 percent.

In the previous week, annual food inflation stood at 9.32 percent.

Overall annual inflation, measured monthly in the world's second fastest-growing economy after China, stands at 9.72 percent.

The ruling Congress-led coalition, which is also reeling under the impact of a slew of corruption scandals, desperately wants to tame prices, fearing a voter backlash in key state elections due next year.

Rising prices have had the hardest impact on India's teeming poor who are the Congress party's main support base.

India's central bank has raised interest rates a dozen times since March 2010, slowing the economy, but they have still not been able to bring down inflation to its long-term desired level of four to five percent.

The bank is expected to raise rates again next week despite warnings from business leaders that such a step could exacerbate the economic slowdown amid growing global financial turbulence.

The government projects expansion of "close to eight percent" in the financial year to March 2012, down from an initial nine percent forecast. The economy grew 8.5 percent last year.

The Prime Minister's Economic Advisory Council chairman C. Rangarajan told reporters he expected good harvests from India's plentiful monsoon to reduce food inflation in coming months.

"The full impact of the monsoon will be felt in November and December. I expect food inflation to come down by then and I would expect overall inflation could be around seven percent by next March," he said.