Food Inflation speeds up, pressurizing government before India budget
Food Inflation

Food inflation in India speeded for the first time in three weeks, putting pressure on the government to disclose steps in next week’s budget to lessen prices.

An index which measures wholesale prices of agricultural products including rice, lentils and vegetables went up by 11.49 percent in the week that ended on Feb. 12 from the previous year as stated by the commerce ministry in a statement in New Delhi today. It gained 11.05 percent the earlier week.

Mr. Pranab Mukherjee, the Finance Minister may increase spending on agriculture and irrigation in the Feb. 28 budget to boost production and curtail prices in the second-most populous country of the world. Mounting food costs have given rise to protests and pushed the central bank to hike interest rates the most in Asia.

The government might use the budget to increase investment in agriculture, improve the supply chain and allow foreign retailers into the food sector, stated the chief economist in New Delhi at HDFC Bank Ltd, Abheek Barua, before the report.

The Reserve Bank of India has hiked its benchmark repurchase rate as many as seven times in the last year to six and a half percent.

Goldman Sachs Group Inc. has stated in this month that India’s three hundred and ninety nine billion rupees ($9 billion) plan to generate jobs for the rural poor is increasing food costs by reinforcing consumer demand in the countryside.

The wholesale-price index for food articles averaged almost in the tune of 17.2 percent in the last year as spending under the National Rural Employment Guarantee Act of 2005 went up almost four times. The program provides one hundred days of work in a year to as many as forty one million families in India, according to government data.

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