Indian inflation raced to its highest level in 13 years, accelerating to over 11% after a fuel price hike, according to data on June 20. Annual inflation in the world's second fastest-growing economy jumped to 11.05% for the week ended June 7 from 8.75% a week earlier, stunning economists who forecast it would be around 9.8%.
Finance Minister Palaniappan Chidambaram blamed surging global fuel and other commodity prices, saying "these are difficult times" and promised "to look at stronger measures." But analysts said the government had little left in its fiscal arsenal -- it has already banned exports of staple foods to boost supplies and check inflation.
The new numbers came as governments around the world battle rising prices. Malaysia Premier Abdullah Ahmad Badawi this week warned of a "real disaster" unless bold steps are taken to tackle the inflation crisis, forecasting a global recession as prices of food and fuel soar. China is groaning under the worst inflation in a dozen years at 7.7%.
The economy grew 9% in the past fiscal year but some economists expect expansion to slow to 7% or lower this year due to monetary tightening and the global downturn. Governments around the world should "come together" to tackle inflation, said the Confederation of Indian Industry. It is not just India but most large economies which have a lot to lose if the global price pressures continue."
Copyright Agence France-Presse, 2008