NEW DELHI, June 20, 2008 (AFP) – India’s annual inflation rate accelerated to 11.05 percent, its highest level in 13 years, according to data on Friday, piling pressure on the government as general elections loom. Inflation jumped by more than two percentage points to hit 11.05 percent for the week ended June 7 from 8.75 percent a week earlier, the official figures showed, stoking expectations of further monetary tightening to tame prices.
The increase was driven by a sharp increase in state-set fuel and cooking gas prices announced earlier this month as well as another rise in food costs.
The new rate incorporated for the first time the increase in fuel prices aimed at stemming huge oil company losses caused by surging global crude prices.
The rise shocked analysts who had forecast that inflation would be around 9.8 percent and was a heavy blow to the government, which desperately wants to tame prices, fearing a voter backlash in national elections due by May 2009.
The Congress party, which heads the national coalition, has suffered a string of state poll defeats with inflation, which has hit India’s teeming poor the hardest, blamed as a key culprit.
The inflation figures hit shares, whic