Food price inflation surges to 16.4%

India's annual food price inflation continued to quicken in mid-September, and analysts see another rate increase by the year-end as the central bank acts to stamp down persistently high inflation. Data released on Thursday showed the food price index in the week ended 18 September rise 16.44%, compared with 15.46% in the previous week, on higher prices of pulses, onions and vegetables.

It was the second straight rise under a new data series--with a different base year of 2004-05, new components and weightings--that was introduced in the week ended 4 September. The Reserve Bank of India (RBI) has said that emerging macroeconomic conditions, especially prices, would determine its future action, with five rate hikes since mid-March having brought monetary conditions close to normal.

RBI projects headline inflation to ease to 6% by March, when the current fiscal ends, from 8.5% in August, but noted in its September policy review that food prices continued to contribute to inflationary pressures. Food prices make up around 14% of the wholesale price index, the most widely watched gauge of prices in India. India's consumer price index rose 9.88% in August from a year earlier, slower than July's annual rise of 11.25%, government data showed on Thursday.

The consumer price index for industrial workers remained unchanged at 178 points in August.

Policymakers and analysts expect food prices to ease on good harvests, but recent heavy rains have disrupted supplies and pushed prices up.

The fuel price index rose 10.73%, slower than the week-ago's 11.48%. The primary articles index was up 18.31%, compared with 16.80% in the previous week.

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