17 Sep 2011

Interest rates raised again in India

5:34 am on 17 September 2011

India's central bank has raised interest rates for the 12th time in 18 months to try to curb inflation.

The Reserve Bank of India raised the policy lending rate, called the repo rate, by 25 basis points to 8.25%.

India has been struggling to contain inflation which is at a 13-month high of 9.78%.

On Thursday, state-run oil firms raised petrol prices by 5% to help curb losses from high crude prices. Analysts warned that it would worsen inflation.

The government is projecting growth of 8.5% for the fiscal year that ends next March.

But the growth rate is threatened by the rising prices - which limit domestic consumers' spending power.

The BBC reports repeated fuel price rises have made the government hugely unpopular with India's massive middle class.

Nearly a dozen rises in petrol prices over the past two years have raised the price of the fuel by more than 50%.

In May, oil companies raised petrol prices by 5 rupees (10 cents US) per litre - the steepest ever single increase.