India’s inflation rate accelerates to 8.4 percentBy AP News Jan 14, 2011 7:03PM UTC
NEW DELHI (AP) — India’s inflation rate jumped in December as fruit and vegetable prices climbed, adding to pressure for the central bank to continue raising interest rates.
Inflation for the month was 8.4 percent compared with 7.5 percent in November, the finance ministry said Friday.
Aside from higher prices for staple foods, the jump in inflation was also driven by the increased cost of manufactured goods and fuel, the ministry said.
India’s central bank is expected to raise key interest rates for the seventh time in little over a year at its quarterly monetary policy review later this month with inflation showing little signs of moderation amid strong economic growth.
Fruit and vegetable prices rose by 11 percent in December, manufactured goods by 4.5 percent, gasoline by 3 percent, and light diesel oil and furnace oil by 6 percent.
Prices for onions, a diet staple in South Asia, have nearly doubled in recent weeks, after unseasonable rains damaged the onion and garlic crops in the western state of Maharashtra.
Food prices have been rising across the globe due to unpredictable weather — including extreme cold, floods in India and Australia and drought in South America — as well as government stimulus spending during the global economic downturn.
India’s government acknowledged that food prices have “frequently risen at unacceptable rates.”
The current high inflation was driven by a rise in prices of vegetables and fruits which was more difficult to manage because these commodities were not held in public stocks, the prime minister’s office said in a statement late Thursday outlining measures to rein in prices.
“There is also an underlying increase in prices of milk, eggs, meat and fish, which is the result of fast growth of the economy, leading to rising income levels,” it said.
The government will import 1,102 tons (1,000 metric tons) of onions and decided to step up the purchase of essential commodities such as edible oils and lentils, and create a panel to recommend ways to fight inflation, it said.