Food Prices Increase by 17.5 Percent

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Photo: Peter Rivera/Flickr Dec. 4 – This year’s poor monsoon has bumped average food prices in India by 17.5 percent according to government reports.

A week ago the increase was pegged at 15.6 percent. This will leave the Reserve Bank of India no choice but to restrict money policy to curb inflation while also inevitably increasing interest rates.

The price of basic goods like onion increased by 30.89 percent in the past year while rice and wheat also surged by more than 10 percent during the same period.

Reports of surging food prices come at a time when the economy grew by an unexpected 7.9 percent during the second quarter and better than what authorities and analysts forecasted.

The Prime Minister’s Economic Advisory Council Chairman, C Rangarajan, told The Times of India that food prices must be controlled otherwise they have a tendency to lead to manufacturing inflation.