India Inflation Hits 6.46%, Worries Government

Central bank said it would take actions to curb inflation.

India's inflation rate marched back toward two-year peaks as it hit 6.46% on March 16, piling pressure on the government which has faced fierce attacks over soaring prices. The wholesale price index, India's most closely watched cost-of-living monitor, showed inflation rose nearly four-tenths of a percentage point for the week ended March 3 from 6.10% the previous week.

The latest rise was fuelled by a 7% jump in vegetable prices, creating a major headache for the ruling Congress coalition which has been under fierce opposition attack for rising food prices.

Inflation, which stood at just 3.86% in the same week last year, hit a more than two-year high of 6.73% in early February.

Subduing inflation has become an urgent priority for Congress after increasing prices were cited by analysts as key factors in its defeat in two state elections last month.

The central Reserve Bank of India said earlier this week it would "take all possible monetary actions" to curb inflation which is significantly above its comfort zone of 5% to 5.5%.

Copyright Agence France-Presse, 2007

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