Bloomberg News

India’s Food Inflation Rate Exceeds 9% for Sixth Straight Week

September 15, 2011

Sept. 15 (Bloomberg) -- India’s food inflation rate exceeded 9 percent for a sixth straight week, maintaining pressure on the central bank to raise interest rates tomorrow.

An index measuring wholesale prices of farm products including rice and wheat rose 9.47 percent in the week ended Sept. 3 from a year earlier, the commerce ministry said in New Delhi today. It gained 9.55 percent the previous week.

The Reserve Bank of India will probably raise rates by a quarter of a percentage point at tomorrow’s policy meeting, according to 12 of 13 economists in a Bloomberg News survey. Governor Duvvuri Subbarao has to weigh the risks to expansion posed by a faltering global recovery against price pressures, which may be stoked by a weaker rupee.

“There are concerns on the global economic front, but inflation still remains the primary concern for the RBI,” Suvodeep Rakshit, an economist at Kotak Securities Ltd. in Mumbai, said before the report.

He expects the Reserve Bank to increase its repurchase rate by a quarter of a percentage point to 8.25 percent tomorrow.

The Indian rupee, which has weakened 6.6 percent this quarter, fell 0.4 percent to 47.86 against the dollar at 11:53 a.m. in Mumbai. The Bombay Stock Exchange Sensitive Index dropped 0.2 percent. The yield on the 7.8 percent bonds due April 2021 gained one basis point, or 0.01 percentage point, to 8.35 percent.

India’s benchmark wholesale-price inflation accelerated to a 13-month high of 9.78 percent in August, the government said yesterday.

Onion prices climbed 43 percent in the week through Sept. 3 from a year earlier, contributing to food inflation, today’s report showed. Potato prices increased 21 percent while vegetable costs gained 17.5 percent.

--Editors: Cherian Thomas, Sunil Jagtiani

To contact the reporter on this story: Tushar Dhara in New Delhi at

To contact the editor responsible for this story: Stephanie Phang at

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