Mumbai: Indian inflation accelerated to 8.56 per cent in January, up from 7.31 per cent in December and 4.95 per cent a year ago, the government said on Monday.
The rise, which is the steepest since October 2008, adds to mounting pressure on policy makers to reverse stimulus measures that have helped Asia's third largest economy bounce back to near 8 percent growth faster than expected.
Food inflation, which has been aggravated by supply bottlenecks and a record drought, again drove the rise in prices, with food prices up 17.4 per cent from the same month the prior year.
Fuel and power inflation was 6.9 per cent from a year ago and manufacturing inflation was 6.6 per cent.
Those numbers suggest that the Reserve Bank of India's worry that food inflation will spill over into non-food segments, is coming true.
The Reserve Bank recently raised its inflation expectation to 8.5 per cent from 6.5 per cent for the end of the fiscal year, in March.
The central bank took its first step toward cooling the economy in January, by hiking cash reserve requirements.
The central bank governor has said the bank will raise interest rates, but analysts are divided over when they think that will happen.
The central bank has also been pressuring the government to rein in spending, perhaps by rolling back some stimulus tax cuts when it presents a new budget February 26.
