There are numerous theories about the stubbornness of India’s inflation. Is it higher commodity prices, driving up costs for critical elements such as food and energy?
The drought in 2009 that sent wheat and sugar prices skyrocketing? The floods during harvests in 2010 that killed much of India’s crop of onions, a key staple? Or perhaps government spending and a lax central bank is to blame?
All this takes great urgency this week with the latest monthly inflation figures due out Wednesday and the Reserve Bank of India meeting Friday to decide whether to add a twelfth interest rate increase to its year-and-a-half inflation-fighting campaign. So far, the rate increases haven’t done much good.
Since the RBI started lifting rates, the economy has slowed from 9.4% to 7.7%. Yet inflation–according to the flawed, but most-closely watched Wholesale Price Index–is still running close to 10%, uncomfortably high
The drought in 2009 that sent wheat and sugar prices skyrocketing? The floods during harvests in 2010 that killed much of India’s crop of onions, a key staple? Or perhaps government spending and a lax central bank is to blame?
All this takes great urgency this week with the latest monthly inflation figures due out Wednesday and the Reserve Bank of India meeting Friday to decide whether to add a twelfth interest rate increase to its year-and-a-half inflation-fighting campaign. So far, the rate increases haven’t done much good.
Since the RBI started lifting rates, the economy has slowed from 9.4% to 7.7%. Yet inflation–according to the flawed, but most-closely watched Wholesale Price Index–is still running close to 10%, uncomfortably high