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29 March 2024

India inflation edges higher, defying forecasts

Published
By AFP

 

India's inflation rate edged closer to double digits in October, defying financial market forecasts and aggressive monetary tightening measures, official data showed on Monday.

Annual inflation, measured by the closely watched Wholesale Price Index, rose marginally to 9.73 percent in October from its September level of 9.72 percent, driven by higher food and fuel prices.

Analysts had been expecting October inflation to drop to 9.6 percent.

The Reserve Bank of India has raised interest rates 13 times since March 2010, setting among the most robust monetary tightening pace of any central bank globally.

But the bank has said it may pause in raising rates further due to slowing economic growth.

Last week, the bank's Deputy Governor Subir Gokarn said inflation was expected to start easing in December.

High inflation gives Indian policymakers little space to ease tight credit policies that might help support stuttering growth in advanced economies, analysts say.

The Congress Party-led government, which is already battling a series of corruption scandals, is keen to reduce inflation to ease hardship for the poor, its key support base.

Inflation is a political tripwire in India where 75 percent of its 1.2 billion population live on less than ê2 a day, according to the World Bank.