India inflation rises to 7.8% in September

Oct. 16, 2012 at 12:37 AM

NEW DELHI, Oct. 16 (UPI) -- India's annual inflation rose to 7.81 percent in September, the government said, putting a damper on any immediate interest rate cut by its central bank.

The Ministry of Commerce and Industry said the September whole price index, used for calculating inflation, was up from 7.55 percent in August.

The latest number was also a 10-month high. India is Asia's third largest economy after China and Japan.

The news comes at a time when the coalition government of Prime Minister has been struggling to control inflation, slowing economic growth and rising deficits.

The government recently announced a number of reforms including foreign direct investments in the country's estimated $450 billion multi-brand retail markets and raising diesel prices to reduce its burden of subsidies. It has also been signaling the Reserve Bank of India, the country's central bank, to lower interest rates to spur growth.

However, the latest inflation numbers may have made it tough for the central bank to ease the rates, the Times of India said.

"When inflation continues to rise, it becomes a very difficult situation ... I am only saying that the circumstances are not too favorable [for easing policy rates]," C. Ranga Rajan, chairman of the prime minister's economic advisory council, said, The Hindu newspaper reported.

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