Food inflation up at 10.86% in third week of Aug

India’s food and fuel inflation accelerated in the third week of August, maintaining pressure on the Reserve Bank of India (RBI) to tighten monetary policy.

Despite a muted global economic recovery and signs that India’s booming growth may have peaked, the RBI is expected to raise rates by another 50 basis points in 2010.

Data released on Friday showed that the food price index, which has a weightage of over 15 per cent in the wider wholesale price index, rose an annual 10.86 per cent in the week to August 21, more than its 10.05 per cent rise in the previous week.

The price rises come despite good monsoon rains this year, which are crucial for irrigation, as well as government predictions price rises would ease. Higher prices of fruits and vegetables led to food inflation accelerating in the latest data.

The fuel price index rose an annual 12.71 per cent in the period, as against an annual 12.57 per cent in the previous week. The government raised prices of fuels in late June.

The primary articles index rose an annual 15.19 per cent compared with the previous week of an annual 14.75 per cent.

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