Food prices push Indian inflation up to 9.9 percent, gov't data shows

Since October, when the government began reporting monthly — instead of weekly — data, headline inflation has increased nearly seven-fold.

That's been driven by spiraling food prices due to drought and rising rural incomes, but it has begun to spill over into non-food areas as India's economy picks up and global commodities prices rise, putting pressure on margins of manufacturers. Food inflation for February was 17.8 percent, up from 17.4 percent in January, the Ministry of Commerce said. Fuel and power inflation was 10.2 percent in February, up from 6.9 in January. Inflation in manufacturing was 7.4 percent, up from 6.6 in January.

A Thomson Reuters poll forecast 9.6 percent headline inflation for February, and the central bank had been expecting inflation to hit 8.5 percent by the end of March.

The Ministry of Commerce also said December inflation was 8.1 percent, not 7.3 percent as earlier estimated.

“If the uptrend seen in fuel and metals continues, inflation could enter the double-digit range in the coming months, possibly resulting in sterner monetary action,” Citigroup economist Rohini Malkani said in a recent analysis of the Indian economy.

Most economists expect the central bank to hike policy rates at its April meeting.

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