India's food inflation eased marginally from a one-year peak, but remained high enough to keep pressure on annual headline inflation in December and reinforce expectations of an interest rate rise this month. Policy makers have blamed unseasonal rains and supply side bottlenecks for high food prices that have put pressure on a beleaguered coalition government already battling multi-billion dollar corruption cases and an emboldened the opposition.
The government is due to announce a series of measures to contain inflation - a scourge across the world as food prices return to 2008 crisis levels - including possible bans on wheat product exports and future trading in some commodities. India has the highest food inflation of any major Asian economy, but other emerging markets such as China and Brazil are also battling double-digit food price rises.
India's food price index rose 16.91 percent, driven mainly by high vegetable prices, and the fuel price index climbed 11.53 percent in the year to January 1, government data on Thursday showed. Vegetable prices were up 3.84 percent week-on-week and have risen around 71 percent year-on-year. Onions were up nearly 2 percent on the week and 71 percent on an annual basis. The primary articles price index was up 17.58 percent in the latest week, compared with an annual rise of 20.20 percent a week earlier.