India's inflation quickened to a 13-month peak of nearly 10 percent in August, data showed Wednesday, piling pressure on the central bank to hike interest rates again despite a slowing economy. Annual inflation jumped by over half a percentage point to 9.78 percent in August from July's 9.22 percent, according to the figures, which came days after data showed industrial output grew at its slowest pace in nearly two years.
"It is more bad news, inflation has gone up - it is perilously close to double-digits," Finance Minister Pranab Mukherjee told reporters, saying the government was working with the central bank to "overcome" the problem. "This is a time of stress not only in India but all over the world. We shall have to maintain our nerve."
Inflation is one of the biggest headaches for the Congress-led government, which is also reeling from a spate of corruption scandals. The price gains have hit India's impoverished millions who are the Congress party's key supporters. The official August inflation figure, which exceeded market forecasts of 9.6 percent, was fuelled by price rises in food, fuel and manufactured goods. India's hawkish central bankers will hold a policy-setting meeting on Friday and most economists are betting on another quarter-point interest rate hike.
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