India’s inflation edges toward 8-pct

NEW DELHI, May 16, 2008 (AFP) – India’s inflation rate accelerated to a 44-month high of nearly eight percent on Friday, dealing a fresh blow to the government which fears a voter backlash. India’s industrial production rose at the slowest pace for six years in March as tighter credit to stem rising inflation hit manufacturing, according to data released earlier this week.

Annual inflation climbed more than two-tenths of a percentage point to 7.83 percent for the week ended May 3 from 7.61 percent the previous week, according to the Wholesale Price Index, India’s closest watched cost monitor.

The rise was mainly due to a rise in basic foods like fruits and vegetables and some manufactured goods, official data showed.

Inflation was last hovering around these levels in September 2004.

The Congress-led government, which must face general elections in a year and a host of state polls in between, has taken a series of steps to check inflation.

It has suspended futures trading in key staple foods such as chickpeas, soybean oil and wheat.

Futures contracts involve betting on future price movements of such items as commodities, bonds, currencies and shares.
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