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India inflation hits surprise 6.89% in March

April 16, 2012
NEW DELHI: India’s inflation accelerated to a surprise 6.89 % in March from a year earlier, official data showed today, driven by persistently high food and fuel costs.

The closely watched Wholesale Price Index reading was above consensus market expectations of a 6.7% annualised rate and came a day ahead of a central bank policy meeting in Mumbai.

The central bank is expected at the meeting to start rolling back its aggressive interest rate hikes aimed at curbing inflation in order to kickstart a cooling economy.

India’s economic growth has been slowing under the impact of 13 interest rate hikes that began in March 2010 aimed at tackling inflation that was near double-digits for most of last year.

The central bank has already moved to crank up lending and spur investment by lowering the amount of cash commercial banks must keep in reserve.

For the last financial year to March 31, 2012, India’s economy is estimated to have grown by 6.9 % – the second lowest pace in a decade.

- AFP


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