Indian Food Prices Are Still Out Of Control

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Indian inflation rose to a seven-month high in September due to high food and fuel prices, the Wall Street Journal reports.

India's wholesale price index spiked 6.46% from a year earlier, up from a 6.10%  increase in August.

The rising figures may spur the Reserve Bank of India to consider raising interest rates even amid tepid growth. From the Journal:

Inflation has hovered at levels above the central bank's comfort zone of 5.0% since June, driven by a sharp rise in food prices after heavy rainfall damaged crops in northern India. Regular increases in domestic fuel prices in recent months as a weak rupee pushed up India's import costs have also stoked prices.

Economists say with inflation sustaining at levels the Reserve Bank of India believes aren't tolerable, another increase in monetary policy rates can't be ruled out.

Vegetable price inflation has been a major problem in India. And the cost of onions — a cooking staple in the country — has increased 322% due to a supply shortage.

Read the full report at the Wall Street Journal »



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