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India lifts interest rates further to combat inflation

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by Kay Mitchell

The Reserve Bank of India (RBI) has raised key interest rates for the eleventh time since March 2010, in a bid to tame stubbornly high inflation in a thriving economy.

The central bank lifted its main rate to 8% from 7.5% as inflation soars on the back of higher food and fuel prices.

In a statement, the central bank said: “Actual inflation so far has been even higher than expected.

“The recent increase in domestic administered fuel prices and the minimum support price for certain food items will also keep inflation under pressure,” the bank added.

Consumer prices in India rose to 9.44% last month – the highest among the Group of 20 leading nations – as food and fuel costs continued to surge.

Annual food inflation has surged, causing major problems for the 450 million people who live below the poverty line in the country.

Prime Minister Manmohan Singh has previously said inflation is a “serious threat” to the country’s growth.

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News posted: July 27, 2011

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