India food inflation soars 17 percent

December 3, 2009 (AFP) – Food inflation in India soared by over 17 percent in the 12 months ending November 21, official figures showed Thursday, raising pressure on the central bank to tighten monetary policy. Earlier most economists were betting that the first rate rise would come in April.

The food price index climbed 17.47 percent in the 12-month period, according to government figures, stoked by the worst monsoon in nearly four decades.

Staples like pulses rose over 37 percent, while rice, wheat and fruits climbed by over 10 percent year on year.

Overall inflation in Asia’s third-largest economy is still benign at 1.34 percent, according to figures released earlier this month.

But the central bank forecasts it will accelerate to six to 6.5 percent by the end of the fiscal year in March, fuelled by food price inflation and an economy that is showing a robust recovery from the global crisis.

“Clearly now going forward, it (the central bank’s soft monetary stance) will have to be reassessed,” Reserve Bank of India deputy governor Usha Thorat told an economic conference in New Delhi.

The inflation figures were released as the head of a government advisory panel said food inflation