India’s inflation slows for second successive week

NEW DELHI, September 4, 2008 (AFP) – India’s inflation slowed for a second week in a row but remained far above the central bank’s tolerance level, data on Thursday showed. Annual inflation slipped to 12.34 percent for the week ended August 23 from 12.40 percent a week earlier, according to the Wholesale Price Index, India’s most-watched cost-of-living monitor.

“There is movement downward,” said Commerce Minister Kamal Nath.

The ruling Congress-led coalition is anxious to control prices, fearing a voter backlash in national elections due by May 2009 from the poor masses, who have been hardest hit by price rises.

The inflation figure was slightly below analysts’ forecasts but still far above the central bank’s target of seven percent for the financial year to March 31, 2009.

Food prices for staples like lentils and vegetables eased while fuel prices remained flat, the data showed.

But economists said they believe India’s central bank would still tighten monetary policy at least one more time to try to get inflation under control before gradually starting to lower interest rates.

“They still have to kill excess demand pressures in the