15 Jun 2011

Inflation higher than expected in India

10:05 am on 15 June 2011

Inflation in India rose faster than expected in May, raising expectations of a further interest rate rise.

The wholesale price index rose by an annual rate of 9.06%, up from the April figure of 8.66%.

The rise was driven partly by an increase in the price of manufactured goods, with the rate of food and fuel inflation both falling.

Food inflation eased to 8.37% in May, from 8.71% in April. But the costs of manufactured goods rose to 7.27% from 6.18% in April.

The Reserve Bank of India is due to announce its next decision on interest rates on Thursday.

The BBC reports a rise would be the 10th rate increase since 2010.

In May, the Reserve Bank raised the rate at which it lends to commercial banks to 7.25% from 6.75%.