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     Ashton Hero Username: Ashton Post Number: 12677 Registered: 05-2008 Posted From: 64.20.45.178 Rating: N/A |
http://www.businessinsider.com/indias-food-inflation-picks-u p-again-2011-9#ixzz1Wk2TvOjL India's wholesale price index (WPI), which measures food inflation, rose to 10.05% in the week ending August 20, from a year ago, according to The Economic Times. Inflation had eased to single digits in June but has picked up since. The price of fruits went up 21.58% and vegetables were up 15.78% year-on-year for the week ending August 20. The cost of potatoes were up 13.31% for the same period, while eggs, meat and fish jumped 12.62% and milk increased 9.22%. The price of pulses and wheat however fell during the same period. Prices of onions surged 57.01% year-on-year for the week ending August 20. Onions which are crucial to Indian cooking have been responsible for the downfall of political parties. Across the border the Chinese government is also terrified of rising food prices that had sparked riots in Tiananmen Square. To curb inflation, the Reserve Bank of India (RBI), the country's central bank has hiked interest rates 11 times since March 2010. Today Brazil cut its overnight lending rates on concerns of global economic slowdown, but India which has expressed similar concerns of a global slowdown is expected to maintain its tight stance on monetary policy. In the past the RBI had said that it would maintain its anti-inflationary stance as long as it was necessary, and that short-run deceleration was unavoidable. With Q2 GDP growth of 7.7% the central bank is expected to announce another rate hike. Societe Generale analyst Alejandro Cuadrado expects a 0.25% rate hike at the upcoming meeting and total 0.5% before the year is out. Indian consumers have lost $128.7 billion to inflation in the last three years mostly because of rising food and fuel prices. So it would come as no surprise that workers are demanding higher wages to bear the brunt of food costs. Now the country is grappling with wage inflation as well. Recently, state-controlled Coal India's unions demanded a 100% salary hike, while wages for the Bombay Stock Exchange (BSE) 500 firms grew 19%, in the three months to June. With a good monsoon food prices are expected to ease. Meanwhile politicians have kept up their rhetoric, promising that food prices will eventually go down. |
