India inflation accelerates

New Delhi:Indian consumer prices rose at the fastest pace in three months in August as costs of vegetables and sugar increased.

The consumer-price index climbed 10.03 per cent from a year earlier, compared with a 9.86 per cent advance reported earlier for July, the Statistics Office said in New Delhi on Tuesday.

The Reserve Bank of India kept interest rates unchanged on Monday to damp inflation risks from a drop in the rupee and a below-average monsoon that threatens to crimp farm output. At the same time, it cut the amount of deposits banks must set aside as reserves to support lending following the government’s biggest push to revive growth since 2009.

“Inflation remains an overriding concern despite the government’s policy initiatives,” Sujan Hajra, a Mumbai-based economist at Anand Rathi Financial Services Ltd., said before the release. “The Reserve Bank will ease liquidity through buying bonds and cutting the cash reserve ratio rather than cutting policy rates.”

The rupee, which has tumbled about 12 per cent against the dollar in the past 12 months, fell 0.5 per cent to 54.305 per dollar at 11:19 a.m. in Mumbai. The BSE India Sensitive Index eased 0.1 per cent, while the yield on the 8.15 per cent government bond due June 2022 rose one basis point to 8.17 per cent from 8.16 per cent before the data release.

Vegetable prices climbed 20.79 per cent last month from a year earlier, Tuesday’s statement showed. Sugar rose 17.51 per cent, while pulses gained 16.04 per cent.