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Food inflation in India has surged after a short period of moderation, according to moneycontrol.com. Prices in fruits and potatoes drove and overall food price increase of 8.74% for the year to April 9, compared to 8.28% the previous week.Fuel price inflation rose to 13.05% in the same period from the previous week’s 12.97%, driven by the rise in global crude oil prices.
Analysts now expect a larger 0.50% rate hike by the Reserve Bank of India (RBI) over a conservative 0.25% hike at their next policy review meeting on May 3, according to moneycontrol.com.
India’s central bank has hiked rates eight times since March 2010.
India’s chief economic advisor Kaushik Basu said they would meet to enforce new anti-inflation measures without qualifying what they would be. The government expects normal monsoons this year and expects agricultural output to increase and help cool prices.
Meanwhile Indian Prime Minister Manmohan Singh is struggling to make sure inflation doesn’t hurt growth. In a statement on Thursday, Reuters reported him saying:
“We will end the eleventh plan (April 2007-March 2012) with about 8.2% GDP growth. This is short of the 9% target.”
Goldman Sachs downwardly revised its GDP growth forecast to 7.8% from previous 8.7% figures and expects headline inflation to rise to 7.5% over previous estimates.
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